Towards eight months that the Central Bank has not directly assisted the Treasury to cover the deficit. It has already issued $450,000 million in this way this month.
Last year the Central Bank had gained 6,000 million dollars in reserves, this year it is losing 10,000 million dollars and the blow of the drought on the balance of the foreign sector is very strong.
Economists have dusted off their antecedent reports in recent weeks hyperinflation of 1989 during the government of Ricardo Alfonsín, looking for parameters.
In a report from October last year, the economist Marina Dal Poggetto made the difference that now the initial inflation story is much lower: “For the first time in 2022, inflation will be close to triple digits, while In 1989 you had been arriving for 14 years with inflation that in just two years was below three figures” and indexing was widespread.
History also shows that the primary fiscal deficit in 1989 was 12 points of GDP and is now around 4.5%, that the monetization of those years was much higher and with a political fact to consider: In 1989 radicalism reigned and the opposition was Peronism.
Faced with distinctive facts, a common denominator is that of the economy with many pesos and few, very few dollars in the Central bank reserves.
Minister announcement set Sergio Massa week did little to change the financial climate, but somewhat calmed a policy-waiting market when the VP downgraded her possible candidacy Cristina Kirchner and the possibility of the dollars coming from International Monetary Fund.
In Economics they are clearer than ever without IMF money, the leeway will shrink significantly on the foreign exchange market, but trading with the organism still appears in a gaseous state.
Those close to the minister know perfectly well that neither the use of the 5,000 million dollars of Exchange with China to pay for imports from that country, nor an equivalent that could come Brazilit would be enough to supply a market eager for currency hedging.
$2,000 million will arrive from the IMF in June as part of disbursements to pay for the organization and The government is aiming for another 10,000 million dollars which expire this year with the addition of a request to be released from the $4.9 billion payment.
The dilemma facing the IMF for Minister Massa and a possible candidate is enormous.
As minister he will maintain the negotiation based, as hitherto, on the blow of the drought on exports and revenues and on the fact that the peak of inflation March, April and May it would liquefy pensions and salaries and, therefore, public spending in real terms.
The bottleneck continues to reside in the use of the dollars that the Fund can disburse. A sticking point is the traditional statement of some exchange rate jumps and the other, which has gained importance in recent days, is the intervention of the Central in financial dollars.
Economists with experience in currency racing are convinced (and argue) that the current government you will not be able to abandon the interventions Neither now nor until the election and, then, the key will be to shape a framework that cushions the recessionary blow of further import payment shutdowns.
Inside and outside the government it is accepted that a stable dollar is the fundamental element for thinking about stabilizing prices. After 8.4% shock Due to the rising cost of living in April, analysts fear it won’t reach double digits in May.
At the moment, they govern no fewer than 11 different exchange rates (official, Mep, CCL, card, savings, blue, etc.) the deferred payment of imports is approximately US$12,400 million and the government encourages companies to pay off debts with their own dollars so they don’t ask for foreign currency at the official price.
THE Drought hit the external sector with a partially cancelable loss of US$ 20,000 million only in the first quarter of next year.
The road ahead is long, narrow and all economic operators are aware of the difficulties. Will there be political prudence to keep the bridge suspended until the elections in a framework that resembles a situation of certain stability?
Source: Clarin
