Silvina Batakis said what the market wanted to hear, but was vague as to how she will do it

The first point to keep in mind is that the minister Silvina Batakis was not the only one to launch the first draft of the plan presented to address the crisis triggered by the the stampede of the dollar and the inflation of recent days.

Accompanied by ministers Daniel Scioli, Julian Dominguez, Matias Lammens and by the president of the Central Bank, Miguel Pesceand by the AFIP holder, Mercedes Maco del PontBatakis announced a series of measures wrapped in central concept that the government must have for fiscal balance.

With more definitions than content on how to achieve this, the minister was firm on the following announcements:

• The agreement with the International Monetary Fund will be realized (clear wink from the outside and inside) with which it will try to shore up the road towards some balance of public finances that today, and due to the pressure of the increase in public spending , it is out of square.

• There will be no devaluation because, from his point of view, the exchange is not backward and the exchange will calm down in September when the amount of dollars that are now allocated for gas imports, which are around 2,000 million dollars, will decrease significantly.

At this point Batakis, like all officials, they bet on believing the official story that the blue dollar is a small and speculative circuit. And they avoid acknowledging that, however small it may be, in recent times, and as a result of the tightening of the exchange rate, it served as a benchmark for pricing. At this point we will have to wait for the market response.

Batakis supported his idea that a devaluation is not necessary since there is a export records (he said it would go up to $ 90 trillion) and that those surplus dollars are what allow gas to be imported so there is no cut in the service.

• Rate increase. The official said so On June 15 begins to govern the segmentation of tariffs with the scheme created by Martín Guzmán. There the question marks get bigger: What will Kirchnerism, which bombed segmentation by income level, say because it can violate fiscal secrecy? Darío Martinez and Federico Basualdo, secretary and deputy for Energy, prefer geographic segmentation by charging more to the richer areas. It is a question on which the Kirchnerist reaction must be closely followed, which in the last few hours has appeared more friendly with Alberto Fernández.

• Commitment to respect the debt in pesos (No to the default of CER-indexed securities) although a commission will be called to study the explosive size of the debt in pesos that has generated a strong distrust in the securities and was one of the key elements in the resignation of Martín Guzmán, a remaining minister, for lack of confidence, without the possibility of financing the fiscal deficit and that he only resorted to the question of the Central Bank.

• Raise the interest rate. Batakis has been clear about the need for positive rates, a request from the market and from Miguel Pesce that Guzmán has refused and now Batakis seems willing to validate.

• Tax signal: an urgent report on the subject by economist Marina Dal Poggetto puts the spotlight on Batakis’ announcements as follows:

“With a inflation traveling at 80/90% Supporting expenditure quotas and staffing limits implies an adjustment that must be seen as the different parts of the governing coalition (Patria, Barrios de Pie, etc.) are assimilated. They support the goals agreed with the IMF. There are no income measures. “

At this point there are three things to watch: Batakis will have to face a real estate revaluation (it would increase what you pay even if it does not raise taxes) but he left aside the much feared increase in rural export taxes and did not mention the possibility of a tax on “unexpected income”.

Batakis’ debut is clearly seen another imprint to the point where he went off on a bribe saying “it wouldn’t be professional” to predict inflation of this year. The result will be so bad and worrying that he prefers to avoid having to give information in a “professional” way.

If the announcements are revised: maintain the agreement with the IMF, fight for fiscal balance, block the entry of personnel into public departments, that public departments spend only what they earn, that they do not think of settling the debt in pesos in addition to this they will not devalue and that interest rates will rise so that the excess pesos does not go to the dollar, it can be said that Batakis announced much of what he wanted to hear to the market in the midst of an exchange-inflationary crisis that has intensified violently in recent days and threatened to drag everything in its path.

Again, it could be concluded that the level of the exchange rate gap aligns and brings politicians closer when, on the verge of precipiceverify that the distance between the official dollar and the free dollar exceeds 100%.

Once that level is surpassed, prices, as seen over the past seven days, overflow and equalize Cristina Kirchner sits at the table with Alberto Fernandez and stops the “fluttering” of the ministers.

Batakis has tried to appear reasonable in the midst of an unprecedented crisis, like all others, the overcoming of which has yet to be seen.