Luis Caputo He was categorical in front of a select group of entrepreneurs who complained to him about the backwardness of the dollar and the high burden of taxes on the prices of many mass consumer products.
The Minister of Economy told them: “Don’t be anxious, but we will not devalue. We need to stabilize, then we will grow and that will be the time to lower taxes”.
It marked very different times from those desired by the countryside and the industry which, despite experiencing different realities in terms of activity, are at the forefront of calls for an improvement in the exchange rate and a reduction in the tax burden.
The minister insists that he will not devalue himself by entering a phase that, like many of his predecessors, he could be characterized as fall in love with the virtues of the fixed exchange rate and calm to help contain prices, especially food prices and the family basket.
The government aims to ensure that the April inflation is below 10% and for this reason the firming of the dollar, or rising to 2%, is functional and essential to calm expectations.
And the minister suggests that he feels comfortable with the dollar level (the wholesaler is at 855 dollars). They assure the Ministry that Domingo Cavallo’s convertible dollar would be at 650 dollars today, so they believe they have arguments to defend the current value in view of the formalization of the bimonetary regime at a certain point.
For producers and exporters of grains and oils, the lack of an exchange rate rise is a cause for concern, although in the last week there has been a slight improvement in international corn and soybean prices after the sharp decline of last year.
The government points out that the Central Bank managed to purchase 10,000 million dollars and this The gap between the official dollar and cash settlement is 27%, the lowest level in a long time. But nothing is free or forever.
It’s true that Central was able to buy 10 billion dollars and also that the debt with importers reaches 30,000 million dollars in a context in which inventories continue to limit operations and the “blend” dollar (80% official and 20% counted with liquidation) maintains the supply of free dollars , but limits Central Purchasing.
The elimination of the “blend” is a demand of the Monetary Fund included in the commitment undertaken by the Government that by the end of the year it will have to accumulate reserves of 10,000 million dollars; Today, net reserves remain negative in the order of $4,000 million. Achieving this goal is difficult and much will depend on the liquidation soybean exports within a month and a half.
This is why it is understood that the President Javier Milei He said if he had another $15 billion he could raise the stock now. Without more dollars, the rally in stocks is distant and the external bottleneck continues to function fully.
Meanwhile, the economy maintains its two faces: the financial sector smiles under the rise in bonds (AL30 and GD30 rise by 15% in the month) and share prices (Merval up by 20%) while on the real level the recession worsens.
According to Abeceb, the estimate of economic activity drops by 4.5% on an interannual basis and is expected an average annual decline of 4% which could approach 7% if the effect of the agricultural sector were excluded.
The agricultural sector will be one of the engines of the recovery, with a 19.2% improvement compared to the previous yeargiving impetus to sales of agricultural machinery, which would grow by 14.6%.
They also expect an 11% improvement in the industry extraction and oil and gas (Vaca Muerta) would grow by 7.4% and 4.3%, respectively. At the same time, the knowledge industry would generate exports worth 10,000 million dollars.
On the opposite sidewalk is the powerful recessive face decrease in consumption hand in hand with the fall in the purchasing power of wages in the face of inflation.
From food, to drinks, to appliances and even cars, the industrial supply chain is aiming for negative numbers and construction, which would collapse by 11%“it will not see the light in public works until the new system of private participation is defined, even if other factors such as the lack of financing at competitive rates also weigh”, we read in the work.
In the 100 days of Milei the turning point in the economy is very profound and it is still difficult for experts to define it clearly If the output will be shaped like a “V”, that is, to be fast after hitting bottom; or whether the fantasy of recovery from an elusive second half will still continue mid-year.
Source: Clarin
