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Martín Guzmán-La Cámpora: the fight is to control more than US $ 10,000 million


The aid of the IMF, the reduction of the fiscal deficit in these months and the monetary contraction, generate buffers for the economy that the toughest wing of the FdT wants to use in the face of the elections.

Ezequiel Burgo

05/08/2021 21:43

  • Clarí

  • Economy

Updated 05/08/2021 21:44

In his book Primer Tiempo,

Mauricio Macri

criticized his government's economic policy for the lack of


between the Ministry of Economy and the Central Bank. Basically, and echoing a view that is somewhat widespread among economists, although not entirely among all its former collaborators, the monetary policy of the Central Bank was for one side (contractive) and that of the Ministry of Economy for the other (expansive). Miguel Angel Broda, to characterize that phenomenon, said that

“while Sturzenegger put the air conditioning on, Prat-Gay turned on the heating”


Perhaps against all odds, today the Frente de Todos is not the same.

The harmony between the Economy and the Central Bank seems to be the order of the day.

This is reflected by the numbers.

But a sottovoce questioning does occur to the technicians of both portfolios by the toughest wing of the Government or, at least, the one that represents the vision of

Axel Kicillof


The numbers of the sheets of the Ministry of Economy

do not lie


Martín Guzmán has been reducing the fiscal deficit at a rate higher than expected by many.

And Miguel Pesce contracted the monetary base so far this year.

Also a reflection not noticed by everyone after the mountain of pesos issued in 2020.

It is before this orthodox start of the Ministry of Economy and the Central Bank in the first months of the year, that economists of Kirchnerism and close to Kicillof (the latter in off) say that Guzmán-Pesce is a

"bad economy



They do not define what “bad economy” means, but you don't have to be very eager to realize that they mean that with this course it

is more difficult to achieve a good electoral result


And that therefore it is time to inject more money in the street instead of 'withdrawing it'.

The figures that La Cámpora looks at are:


US $ 4,354 million

that will enter the reserves from the transfer that the


will make


The Frente de Todos, through a project in Congress, wants Guzmán to use that money (an issue that the agency for all countries in the world due to the pandemic) to encourage demand instead of paying the debt as Guzmán plans to do. .

- Then an

extra US $ 7,000 million

that Guzmán would have in his pocket if he continues to reduce the fiscal deficit at the rate he has been doing and keeps the Budget strictly.

It is a calculation made by the Argentine Institute of Fiscal Analysis.

- Finally, the pesos of the monetary base, that is, the issue.

So far this year,

the money in the hands of the public and that the banks have in the Central Bank according to official payrolls

has contracted about

$ 100,000 million


Adding up all these boxes,

there is at least about US $ 10 billion at stake

between fiscal and monetary policies and IMF aid.

In La Cámpora they believe that the economy is not only not favoring them for October.

Rather, it

harms them


Economists like Claudio Lozano have criticized Guzmán because the minister, they say, perhaps prioritized the agenda with the IMF too much.

But those who speak with the minister and understand his thoughts, will realize that the issue is deeper and goes beyond the IMF issue.

The current fiscal and monetary policy bias is what Guzmán believes is adequate to prevent the avalanche of pesos that remained floating after the aid that had to be given to face the 2020 recession, from triggering an

inflationary flash greater than that suffered by Macri



Guzmán is aware of that, La Cámpora and Kicillof are only interested in the elections


So the bottom line is that Kirchnerism has an Economy Minister who does not prioritize the agenda with the IMF, but rather has a different vision than Kicillof's to lower inflation and generates tension with politics in a year electoral.

There is one more risk.

Guzmán and Kicillof are both


and, therefore, believers in their theories.

John Maynard Keynes said that politicians sometimes get caught up in the ideas of some economist.

Is it what Cristina Kirchner will fear with Guzmán?

Meanwhile, close to Kicillof argue that it is not only necessary to delay the agreement with the IMF.

SDR money must go to boost demand and the pace at which the fiscal deficit is lowered and weights are withdrawn from the economy should stop immediately.

According to the IARAF, in the first three months of the year, tax revenues increased 10.5%, discounting the impact of inflation.

Spending fell 5%.

This means that Guzmán's box grew 70% more in the first three months of the year.

But there is more.

If one takes into account that the minister went out to the market to borrow pesos (and he got them by allowing Pesce to issue less to finance the deficit), the minister's cash was strengthened.

According to a report this Friday from the consulting firm Quantum, headed by former Finance Secretary Daniel Marx,

Guzmán has about $ 26.6 billion more in the box than at the beginning of the year.

The fiscal red could end in the 2.4% of GDP zone (instead of the 4.2% budgeted) if the minister followed the Budget to the letter according to IARAF.

They are almost US $ 7,000 million more that would appear to Guzmán on his payroll than the goal of 4.2%.

Is La Cámpora going for them?

The minister has that cushion because, quickly, he made the Budget with a soybean at US $ 350 and now he will have more collection (the withholdings would be US $ 2,500 million more for the best prices),

-It anticipated an inflation of 29% and it will be higher with which the expenditure will be liquefied

-he did not have the wealth tax

- It started from an assumption that closed 2020 with a deficit of 8.3% of GDP and in reality the red one was 6.5% of GDP.

Guzmán, Pesce and the market know that

as the elections approach the tension on the accounts will increase from politics


"Monetary expansion will tend to accelerate after six months of fiscal and monetary moderation



says the Broda Study in a paper for its clients where it points out the monetary adjustment carried out by the bank.

It says that credit to the private sector in twelve months increased the same as inflation.

And that

"in the last three months, annualized inflation was 62.6% while the amount of money expanded at an annualized rate of 31.3%



It is the reverse of the President's phrase on Friday when he said


"There is not enough money to put in the pocket of our people if every time we put money in, prices go up."

The economy gives the government room to leave the corrections that Guzmán-Pesce have been making and aggravate the imbalances.

Broda believes that even by issuing more, inflation will begin to be around 3% per month after this Thursday (the CPI for April is out, a little less than 4% is expected).

Federico Furiase, director of Eco Go, puts it this way.

"With this dollar, stocks, soybeans and SDRs, there is a cushion for malpractice



He calculates that if the dollar from now on rose 1.5% every month and inflation 3%, Alberto Fernández would end his term with an exchange rate like the one that Macri had at the beginning of 2018.

“There is a margin, but also


: this Central Bank has fewer reserves and inflation is at a higher level ”.

Source: clarin

All business articles on 2021-05-11

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