For international banks, the Massa plan is not enough to restore confidence

Although, as announced Wednesday by Sergio Massa, he will seek the support of a group of international banks to try to strengthen the reserves of the Central Bank, the main financial players worldwide have warned that the announcements of the new Minister of Economy not enough to change the economic course of Argentina.

In a relationship to its customers, the Bank JP Morgan He assured that, although in the previous market the expectations regarding the decisions that Massa would take at the helm of the Palacio de Hacienda were high for the market, the package of measures presented “a macro stabilization plan cannot be implemented”.

Despite noting that there are still some details and new economic measures to be known, the economists at JP Morgan warned: “Our first impression is that theThe ads still lack breath and consistency that current challenges require and remain very far from the stabilization plane that the current dire economic situation would require.

Along the same lines, a relationship of Goldman Sachs he pointed this out “The announced measures are disappointing and they do not constitute a global and coherent plan for the rebalancing of the economy ”.

In this investment bank, the diagnosis was that the country “needs a combination of more.” conventional and disciplined rebalancing the economy, and this implies, in the first place, establishing a credible path towards structural fiscal consolidation and an exchange rate able to reflect the macroeconomic fundamentals that would require a bold strategy ”.

Like most City economists, Goldman Sachs believes ite The objective of reducing the deficit to 2.5% sanctioned by Massa appears very ambitious. “A significant effort is needed in the second half of 2022 to achieve the goals outlined in the IMF program. In our assessment, the implementation of some of the measures (fiscal adjustment and reduction of subsidies) will be politically and socially challenging “indicate by Goldman Sachs.

The large absence for both investment banks in the program presented by Massa was a measure to resolve the foreign exchange tension.

“At the moment, no changes to the current currency regime have been disclosed. Although further measures could be announced in the coming days, in the absence of further changes, it is not clear how the current framework will allow the BCRA to rebuild net reserves sustainably amid the large exchange rate gap, “noted the JP Morgan report.

Along the same lines, the Goldman report highlighted: “Argentina needs a more conventional and disciplined combination of policies to rebalance the economy, and this implies, first and foremost, andestablish a credible path towards structural fiscal consolidation and an exchange rate that allows it to reflect macroeconomic fundamentalswhich would require a bold reduction in financial repression / control “.

According to what has been leaked in recent days, Goldman Sachs and JP Morgan would have appeared as two of the three entities with which the Massa team would be negotiating a repo, to try to inflate the Central Bank’s reserves between 2,000 and 3,000 dollars. Therefore, the reading of these banks could be a yellow signal in the medium term.

A similar interpretation was made for the Brazilian investment bank BTG Pactual, where they assured that the program presented by the minister on Wednesday constitutes “many reasonable promises, but no substance to back them up”. Economists of this magnitude have argued that the measures presented are “an attempt to preserve the agreement with the IMF, with cosmetic adjustments.”

In their analysis, they warned that resorting to a repo to bolster reserves could be “onerous” and that the government will have difficulty in obtaining the political support needed to move forward.

“We believe that the combination of current bond prices and a haircut of at least 50% means that the value of the collateral will have to be 10 times the money raised, which no government should accept. Congress to sign such an onerous agreement, “they said.