The Mass plan to stabilize the dollar and generate a financial “summer”

Alberto Fernández is back in contact with Sergio Massa this weekend after the meeting held on Friday in Olivos. The “super minister” is preparing for his Grand Cabinet Debut: In the next few hours he will announce the team that will accompany him in the unified portfolio of Economy, Productive Development and Agriculture. it will concentrate like that a large part of the push-button panel, with the exception of the Secretary of Energy and AFIPboth controlled by Kirchnerism.

Mass The transition began on Friday on the phone with Silvina Batakis and this Monday he will disembark at the Palacio de Hacienda. With these levers and a signal from the markets, he will try to avoid a collapse, stabilize the dollar and generate a sort of financial “summer”, starting from a more delicate scenario than that received by Martín Guzmán and Batakis. His collaborators have already approached him with some ideas that could be included in the package he will present on Wednesday.

In the Tigrese strategy, the agreement with the IMF plays a fundamental role. His good arrival at the White House it will serve to recompose the dialogue with the body, after Batakis’ failed US tour, where she was received last week by the Fund’s head, Kristalina Georgieva, Treasury officials and investors, to be replaced by Massa. In her environment, they believe the fiscal path will have to be “better explained” to achieve the goals, which her predecessor proved with the announcement of a virtual spending freeze.

The order of accounts, the scope of which is not yet defined and generates expectation in the establishment of a more “pragmatic”, it would be accompanied by a strengthening of abused reserves. One of the bets is financing of the World Bank (WB), the Inter-American Development Bank (IDB) and other organizations, a responsibility now borne by Massa, which could unlock the more than $ 700 million delayed by tensions with the current head of the IDB, Mauritius Clever Carone.

The other tool, they point out to their team, should be a “credible” exchange policy. Last week the Central Bank launched a differentiated dollar for the soybean sector with a 10% improvement, applied a sharp rate hike and accelerated the official exchange rate devaluation rate. Just when it became known about the mass landing, the markets reacted with one rebound in bonds and sharp decline in financial dollars and the blueexceeding the $ 300 minimum level after more than 10 days above that level.

In their circle they don’t talk about a jump in the exchange rate, but they want the field clearing the withheld cereals, a stock that according to Equilibra could reach 10,000 million dollars. “Soy is the key,” they say. The president managed to keep Miguel Pesce at the helm of the BCRA, where he thwarted Guzmán’s attempts to influence the money table and gained power by his resignation. The unknown is whether, being the owner, he will continue to command. “Pesce is a survivor, he will continue to fight it”they insure in a private bank.

Instead, “incentives” are assessed for exporting sectors that bring in more foreign currency. Massa had worked on a project to increase foreign trade through an “exchange premium” or tax breaks. They estimate that the energy sector, agribusiness and the software industry could contribute more than $ 5 billion. Another possibility is to generate a line of financing with foreign sovereign funds that bring new dollars to the country. “There aren’t even that many options,” they acknowledge.

One of the main challenges will be to take advantage of the grace period that the market seems to have granted him to put his plan into action, which Batakis did not have in his 24 days aboard a drifting plane. Against the clock, he will have to start reducing inflation, lower the exchange rate gap and stop the loss of reserves. It won’t be easy: CPI is expected to rise between 6 and 8% in July. And on Monday, $ 442 million is to be paid to the IMF after writing off $ 670 million last Friday.

“Today you have a strong permanent deterioration, nothing will explode, but (the situation) deteriorates day by day,” they say in their environment. “Sergio Massa can try to stabilize, which takes a long time and is basically going to glory or slowing the rate of deterioration,” they explain.

Massa’s councilors aspire to realize a rapid improvement of the financial climate. They speak of a “sunless” summer., but both in Washington and in business are less optimistic. They are waiting, perhaps as an expression of desire, for a tougher adjustment plan, which can trigger a recession and greater social tensions, without being clear on another question: what will Cristina Kirchner do if Massa follows that path? Will the super-minister be the new target of her erosive speeches?