Sergio Massa dusts off Macri’s agenda and in JxC they seem to be waiting

Sergio Massa, sitting in his office, called Cristina Kirchner from his phone e asked in speaker so that your interlocutor was sure, if he agreed with the rate hike announcements.

The voice of the other party (the exchange took place before the attack eleven days ago) made an Argentine Wall Street investor withdraw the baton, convinced that “this time yes, Massa has Cristina’s support”.

This answer that most businessmen, investors and economists are looking for these days is the one that haunts the analyzes of the feasibility of the Massa plan. To what extent does the vice president support the audacity of the economy minister say it will respect the IMF plan?

The investor who has seen Massa knows the country. The opposition also has fluid dialogue, particularly with a leader looking to run for president of JxC in 2023.

Before going to the United States, the minister spoke to at least a couple of economists close to Together for Change, one of them was even a member of Nicolás Dujovne’s team who knows the Washington agenda: Treasury, corporations and IMF.

And what does La Cámpora say?

Andrés Larroque has already done it. “We have an Economy Minister after three years of government”. And Juan Cuattromo, director of Bapro, and man of Axel Kicillof, justified this week the decision to reduce the fiscal deficit: “You have to be pragmatic (…) fiscal adjustments are sometimes expansionary”.

What is going on then?

JxC people who saw Massa before traveling to the US noticed the same gesture as the photos from the tour: Massa holding a pen, a notebook and noting what topics in Argentina they might be interested in and what people see.

For the former, there are two issues: food security and energy.

“Argentina has three products that the world will demand, food, energy and mining,” says one of those who spoke to Massa and gave him his point of view on what they expect in the United States. “Today there are no guarantees that suppliers will guarantee its production in the coming years and Argentina has an advantage: its geography is far from conflicts”.

The transfer of global value chains is a topic under discussion this week by the Brookings Institution of Washington in Buenos Aires, where Adam Tooze (Columbia), Timothy Sturgeon (MIT) and Andrés López (IIEP UBA).

Paul Krugman wrote this week in New York Times an article that argues why globalization is in retreat (The world is less flat, as opposed to Thomas Friedman’s book The World is Flat, where he described a hyperglobalized economy).

The minister also noted who to see in Washington. Tomorrow, his meeting with the Treasury adviser for international affairs, David Lipton, who has received four ministers of the economy in the last four years will be fundamental. (Dujovne, Hernán Lacunza, Martín Guzmán and Silvina Batakis). Massa is the fifth. Lipton worked for the IMF in Argentina from Austral. Know the country.

“I speak in a low voice because here you can hear everything”said Clarione someone close to the minister right now in the US and asks (like everyone else) not to be identified. “CFK supports it in this”.

But what is this “?

Specifically: the correction of tariffs to reduce the fiscal deficit, the increase in interest rates to favor the demand for pesos, a more favorable exchange rate for soybean farmers to moderate the outlook for devaluation and a Taylor made product for investors. de la city (bonds linked to inflation and the dollar) which allowed Massa to kick deadlines for $ 2 billion.

A former Macri official, a hardliner, puts it this way.

“Massa is fine. He took the right path, the same one we imagined in 2019 if we had won the elections. Cristina knows, there is no one else ”.

With La Cámpora “neutralized” (at least for the moment) and some “silent” PRO hawks, the economy has emerged from a turbulent zone where forces from above and below are shaking the dollar and bonds. There is a respite for the moment.

In an Argentina circular, at times, the economic agenda returned to that of Together for Change in 2019 when the plan of the Ministry of Economy envisaged replacing the IMF’s three-year stand-by program with a 10-year Extended Facilityas Dujovne thought at the beginning of 2019 and then Lacunza, already with shares, frozen rates and debt redefined in pesos. Like today.

Three years later, having given up on the idea of ​​paying the IMF in 10 or 20 years and lowering the surcharges, all traces of a Guzmán agenda that begins to be buried in the dust of everyday life, the government establishes an agenda more similar to that of Lacunza or Dujovne than to that of Guzmán. What happened then? Was the former minister perhaps a parenthesis in the timeline that Larroque himself admits to delegitimizing his administration?

“Massa seeks the support of shareholders and creditors to solve the IMF’s problems,” said Javier Timerman, partner and investor of AdCap. “Guzmán proposed a more theoretical and ideological struggle”.

But as they say in economics, what is notional is one thing and what is effective is another, that is, what is intended with respect to what results.

The minister ratified his commitment to achieve a fiscal deficit of 2.5% of GDP for this year (see more on page 22). And although many economists in the city today don’t believe it will succeed, according to economist Fernando Marull, with the announced measures would be 0.24 percentage points far from reaching 2.5%.

For Eco Go, by Marina Dal Poggetto, the key to the adjustment will be inflation that liquefies spending. “The possibility of reaching a primary deficit of 2.5% of GDP this year requires inflation to continue to accelerate. Something similar to what happened with the fiscal consolidation in 2018-2019, “said Eco go. Another similarity with the Dujovne-Lacunza agenda.

Another contraindication of the IMF rays for the economy will be the accumulation of reserves: for the organization the economy is overheated and fewer imports are needed to take care of the dollars. The consultancy firm Equilibra, by Diego Bossio and Martín Rapetti, calculated that if Argentina reached its reserve accumulation target for the year, the economy would have to plunge into a recession equivalent to a decline of at least 4 % of GDP.

In the next few days Massa will announce that the IMF will grant him an outlay of approximately $ 4,172 million. It is for reaching the goals with the IMF in June (which is already known and that was really due to the easing of the goals that Guzmán achieved in June). “Although he didn’t hit the $ 400 million mark, he came close to achieving the goal,” says Equilibra.

The discussion now goes through the turnaround at the end of the year (approximately US $ 6.254 million). The accumulation of reserves, according to several private calculations, taking into account IDB transfers, recent BCRA purchases and soybean liquidations, would be approximately US $ 1,000 million from fulfillment.

The disbursements agreed by Guzmán between now and the end of the year amount to $ 1,680 million more than it expires until the end of 2022. “Any delay in transfers would leave you with a negative reserve level like in February of this year,” says Eco Go.

Luciano Laspina, JxC’s deputy and economist, is less gullible than his fellow hawks consulted for this note. “Massa’s discursive turn is phenomenal. But more than a stabilization plan, he is making a plan to liquefy public spending which leads to an increase in the quasi-fiscal deficit and forces inflation to be higher and higher. Lots of smoke, noise and a few nuts ”.