For analysts, the “expectations” of the Massa plan are deflated

The week ended with the financial dollar above $ 300 like when Silvina Batakis was Minister of Economy and it was the one who finally triggered the arrival of Sergio Massa.

Announcements of rising government spending in recent weeks and accelerating inflation in August could not be neutralized by the government’s recent promise to cut subsidies, raise interest rates, and even ensure it met its government deficit target. IMF of 2.5% this year. “Only three weeks and is starting to deflate the expectation that the new Minister of Economy can obtain favorable results in its management “says Guido Lorenzo, chief economist of LCG, in a report this week. “Obvious the difficulties of the BCRA in accumulating reserves”says the consulting firm Quantum Finanzas, headed by Daniel Marx, former finance secretary and now a member of the debt committee.

JP Morgan also indicated in a report from the United States this week that it expects minimum inflation close to 6% per month through the end of the year.

The social and labor conflict in the face of an inflationary acceleration scenario causes the government to put compensation on the negotiating tableand the promise made two weeks ago by Massa, to put a ceiling on the spending of the ministries, begins to fade.

“The expectations were inflated, the announcements were made in the right direction, but now there is a lack of concrete measures within a coherent plan”, puts in order the sequence Federico Furiase, economist of Anker Latin America. “We need to correct a fiscal inertia that forces us to show more things in terms of the economic plan”.

Delphos consultancy stated that the tariff segmentation and the new Advance Earnings are “modest”To channel the deficit.

According to Furiase “with the tariffs there was a more decisive decision. But on the foreign exchange front it is an unfinished stage due to the gap that is still high but difficult to achieve because it requires a jump in the dollar that is difficult to resolve at the moment ”.

The gap between the liquid dollar and the wholesale dollar closed on Friday at 112%. That’s what Furiase is referring to. On the last day of the week, the financial exchange rate rose 2.2% and closed at $ 300.30. He advanced six pesos over the course of the day and amassed four consecutive reels of ascent.

Has the market begun to ‘measure’ Mass?

For Furiase yes.

“To the extent that no concrete measures arrive, the market will put the Ministry of Economy to the test. Part of a severe macroeconomic imbalance, the Central Bank has few reserves and there is no credibility. They have to make a quick delivery of policies ”.

What are the keys to follow in the next 10 days? He asked Clarione to Furiase.

– Inflation and reserves.

According to the consultancy LCG, in the third week of August, food increased by 1.9%, accelerating by 1.2% compared to the previous week. “Due to the dynamics of the first three weeks, an increase of almost 5% had already been accumulated in August, similar to what happened in June. Average monthly inflation slowed on the margin, settling at 6.6% ”.

JP Morgan wrote in a report this week that the The baseline scenario for Massa is an average monthly inflation of 5.7% between August and December.

Concerning the currency and reserves front, the doubts on the market are increasingly generalized.

“The risk of a weight run remains latent as long as there are no stocks of international reserves that allow the public to forget to look at the BCRA’s balance sheet almost daily. Even so, accumulating reserves implies (ba) a devaluation of the national currency, something that will accelerate the rate of inflation and make social peace more difficult“put LCG.

For its part, the consultancy firm Quantum led by Marx admits the complications in its latest report. “The BCRA’s difficulties in accumulating reserves are evident: between January and August, gross reserves fell by $ 2,653 million “.

Marx warns that the next few months will be difficult. Even by discounting fewer imports for energy, the government seeks to advance liquidations of accumulated agricultural grain exports.

To counter this, the government is said to be working on the current stock of SDRs, including any possible new disbursements from the IMF. In addition, there is talk of the possibility of obtaining loans from other entities.

A crucial question in the next few hours will be the definition of whether Massa will be able to define his team. The appointment of the Deputy Minister of the Economy because he still does not have a head to coordinate macroeconomically a program that allows him to get closer to the objectives of the IMF. In second place, complete the landing of Massa in the Central Bank. This week Arnaldo Bocco has left his chair and Lisandro Cleri (alongside Massa) and Eduardo Hecker (Alberto Fernández) are expected.