Ezequiel Burgo
09/13/2021 10:53
Clarín.com
Economy
Updated 09/13/2021 10:53
The result of the election will trigger
government
decisions
on economic matters.
There is talk of
changes
in the economic cabinet and even
new
measures
.
In relation to the first, most of the analyzes about how to reconfigure the Cabinet will revolve around the figure of Martín Guzmán. It is a classic of the ruling party. Raúl Alfonsín did it in 1989 (when Eduardo Angeloz lost to Eduardo Menem in the polls) and Mauricio Macri in 2019 (Nicolás Dujovne left, Hernán Lacunza entered). Why wouldn't Peronism do it, especially if the questions come from within the force itself?
It is known (it was known) that the tension between a Minister of Economy and the political wing of a government increases in electoral years. In the case of Guzmán and La Cámpora particularly, the questions escalated beyond the usual bid for 'the box' in recent months. The Cámpora reproaches the minister not only for the fiscal adjustment of the first semester (there was zero fiscal deficit), but also publicly exposing Federico Basualdo (the undersecretary of Electric Power who has the backing of Cristina Kirchner and Guzmán wanted to kick out), in addition to campaigning in the last tranche when inflation is above 50% per year. They speak of "clumsiness" on the part of the Ministry of Economy.
Regarding the second (new government measures), speculation will revolve around two possible decisions.
One is to step on the accelerator of spending by injecting more pesos into the economy and burning the ships
. The other, to
provide turn signals and thus aspire to capture the attention of an electorate that was elusive
. The first thing would be to deepen the course towards a more intervened economy, with more weight of the State in the decisions and take Axel Kicillof on stage. The second would be to start an (incipient) path to correct the imbalances in the economy. It could include some definition in the negotiation with the IMF.
Sergio Massa
pushes for it. It is said that Martín Redrado would have bills prepared if he is summoned.
What are the
main variables
to monitor in the face of this path that the Argentine economy is facing and will
bifurcate
.
Inflation
A drop in the inflation rate is expected in the coming months according to the Broda Study.
Tomorrow the August data comes out and it could be the lowest number (less than 3%) in almost a year (since the September CPI).
The Government will say that the measures taken had an effect such as the ban on exporting cuts of meat.
But this downward trend in prices that is projected (if it finally occurs and is also
temporary
because it was achieved by stepping on tariffs and the dollar), could not last long if, after the electoral defeat, it decides to deteriorate the fiscal accounts even more than what it has been doing since July.
If they put more pesos in the street, the disinflation will be aborted and the inflation that is expected to be 49% in the year (REM estimate), could quietly close above 50%.
Ball of Leliq and fees
The Central Bank's debt will increase if the Government now goes out to dump more money on the streets.
This is because Miguel Pesce will have to issue more Leliq to counteract that issue and not overheat prices.
The Leliq are letters that the monetary authority places to the entities in exchange for them to give it their weights and thus decompresses the inflationary tension.
The consulting firm Delphos estimated this Friday that the sum of Leliqs + Pases would be $ 4.8 trillion at the end of the year (10.8% of GDP) with an interest issue of $ 1.3 trillion (3.1% of GDP) .
But if Kirchnerism steps on the accelerator, the Central Bank's debt ball will only increase and a vicious circle could be generated as happened in the 70s and 80s with the mechanism of the monetary regulation account and remunerated reserve requirements.
All of this meant more inflation (back to point 1).
The IERAL, of the Mediterranean Foundation, calculated that if instead of a primary deficit of 3.5% of GDP at the end of the year, the deficit was 5% of the Product, and it would be difficult for Guzmán to convince investors to renew their deposits and until the end of the year achieved the same ratio of August (98%),
the ball of Leliq + passes would reach the highest level since 2017, "the maximum before and prior to the blender crisis of 2018".
In a scenario in which the government announces that it will accelerate the talks with the IMF or that it will correct distortions, the demand for pesos could increase and thus loosen the BCRA's debt.
Guzmán's Tenders
"We do not rule out that the next tenders the roll over could be below the average of the first eight months of the year (119.6%)"
, says an article by Anker Latin America. The decision to increase spending further could scare away the support of investors Guzman
need in the coming months to refinance the fiscal deficit.
"Faced with the fragility of the macroeconomy, the concentration of maturities pesos in the very short term and increasing exposure to sovereign risk banks, exchange voltage and the pressure on interest rates in pesos would increase ”
.
Could there be a reprofiling of the peso debt in case the refinancing falls below 100% if investors are concerned and start the questions in the market?
"We assign a very low probability to this scenario,
" says Anker Latin America, "
since we believe that it would be an extreme measure that the Government would only validate once all previous instances had been exhausted."
Dollar and exchange gap
In ten days the Government will pay the first installment to the IMF of the loan it took in 2018. It is about US $ 1.8 billion.
It will cancel them with the special drawing rights, some titles that the Monetary Fund issues and turned the country as part of an extra help that the organization gave to all its members due to the pandemic.
The problem is that in December there is another equal maturity and in March an even higher one (US $ 4.8 billion).
Conclusion: there are not enough reserves (net is about US $ 6,152 million and net liquid in US $ 1,900 million according to Quantum Finance calculations).
If the government opts for the strategy of 'burning the ships', the expectations of a further devaluation will increase.
And the gap too (today at 89%).
The futures market shows higher implicit rates the further the signed commitment is: November contracts operate 2.8% above October futures and the same occurs in subsequent months.
A gap that does not yield means more problems for the economy because the private sector has less incentive to liquidate exports and overbill imports, deteriorating the trade balance.
The gap could give way (and the pressure on the dollar) if the Government gives a (firm) signal to advance in an understanding with the IMF to repay the debt and what will be the roadmap for public spending for the next few years.
IMF and international context
According to a calculation by economist Lorenzo Sigault Graviña, from the Equilibra consultancy, the fact that international prices remain at their level will be more decisive for the Argentine economy if the Government signs an agreement with the Monetary Fund and clears its financial horizon.
Wall Street last week posted its worst performance since February, in large part because of fears that the Federal Reserve will reverse stimulus policy this year.
That would strengthen the dollar and bring down commodities.