For economists, Sergio Massa must take dollars, reduce the deficit and improve his pockets

After the positive impact of the “mass effect” on the markets, the new super-minister has advanced in recent days with his team in emergency plan which will be presented this Wednesday. Although the measures are kept under strict secret, economists believe the new management will have to stop the loss of central bank reserves, reduce the fiscal deficit and improve pockets, among some of the most pressing challenges.

Analysts acknowledge that Sergio Massa starts with some points in his favor. Since its landing in a unified Ministry of Economy, Productive Development and Agriculture was confirmed, country risk fell by 700 points at the end of last week and parallel dollars fell less than $ 300. This influence, added to its political weight, would have given it greater coordination power in the economic area. But even so, the prospects remain critical.

“The crises of financial exchanges require global plans and three key points: 1) overreact, so that measures exceed expectations, 2) use tools that are easy to understand for citizens and 3) execute quickly, “said Martín Redrado, former head of the central bank and economist appointed by Sergio Massa, who called to replace Martín Guzmán with the condition to send a package of read in Congress.

In this context Ricardo Delgado stressed the need to do so strengthen reserves, establish a “credible” fiscal rule and improve revenues. “Today I don’t see room for split exchange, doing it without a plan would be a mistake, but there could be mechanisms to speed up the settlement of the beans, making sure that the producer receives more than now, even after the soybean dollar that came out. last week, “explained the president of Analytica.

Despite the restrictions on imports and the positive reaction of the markets, the Central Bank had to get rid of them $ 140 million last Friday to pay for energy purchases. Central’s net sales increased in July $ 1.275 million. The hurdles announced in early July failed to stop currency bleeding and put more pressure on parallel dollars and inflation, which hit a record 64% yoy in June.

For Soledad Pérez Duhalde Massa will have to advance rapidly in the “fine tuning” initiated by Daniel Scioli, Silvina Batakis and Miguel Pesce. “They have to continue with that, but for it to work the timing of the measures is fundamental and that they have a greater weight. The twin deficits have become infinite, we must reduce them, otherwise the only way is instability and this means economic crisis and, probably, political crisis “, said the director of operations of Abeceb.

In between, according to the economist, the “distortion” of relative prices and the increase in spending should be attacked. “We need to give a message, which has an impact on the dollar. We need to put on Tuesday the person who is in line with the macro fundamentals, we need a rate correction and an exchange rate aligned with inflation, it is necessary but not sufficient, I do not rule out some more abrupt adjustments “, warned Pérez Duhalde.

For Ecolatina, the new economic leadership has no room for an expansion of the fiscal deficit or to apply an anchor of exchange, as Pesce did. Therefore, although the new administration will have “advantages”, it will have to face the challenge of “defusing the expectations of an immediate crisis, addressing latent imbalances (shortage of reserves, high inflation, fiscal deficit, exchange rate gap) and stabilizing the beyond. the short term.

Although the team of Massa evaluates in principle to strengthen the reserves through incentives for export sectors and external funding, it is still unclear whether it will be able to do so. “The deterioration of the variables has been very rapid, so the economic policy measures that may work in May may not be enough in August,” said Jorge Vasconcelos, vice president of IERAL led by Carlos Melconian.

And in this sense he warned that the exchange rate truce would be temporary: “In turn, the market is very convinced that at some point the government will have to devalue. There are 8,000 million dollars bought in future dollars. It’s a very strong arm wrestling. Apparently Massa first says to replenish the reserves first and then in the end they will see if the devaluation will take place “.

But raising dollars and cutting the deficit isn’t easy. “The how is not clear, it may be more than a step, the urgency is to close the gap. Part of it you did it by raising the interest rate in pesos, then you have to raise the exchange rate, or devaluing or doubling. “, said the deputy director of EcoGo, Sebastián Menescaldi. “If you get new dollars, you can try something in between, but still no changes in relative prices“, He added.

AQ