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Salaries, spending and dollars: What if the President listens to Cristina Kirchner?


In her letter, the vice asked her to increase spending. What could happen to the exchange rate.

Daniel Fernandez Canedo

09/18/2021 11:10

  • Clarí

  • Economy

Updated 09/18/2021 11:10 AM

Among the multiple messages and interpretations contained in the public letter of September 16 from the vice president

Cristina Kirchner

to President Alberto Fernández

there are two referring to underlying economic issues that stand out.

One of them is clear: Alberto, you lost the elections because

wages ran backwards

and the rise in food prices took the people's pockets ahead.

The other, more technical, was related to the fact that the 2021 Budget contemplated a

fiscal deficit of 4.5% of the Gross Domestic Product

and in the first eight months of the year it had reached only 2.1% of GDP, with what remains a lot to spend from now until the end of the year.

How much? 

One trillion pesos

more or less, which could be used to attend to the pandemic and to attend to the "delicate social situation."

Thus, the

Kirchnerist recipe

, and even more so after the strong defeat suffered in the PASO on September 12, remains the same: increase wages and expand public spending

at all costs.

It is evident that President Alberto Fernández and his Minister of Economy, Martín Guzmán (Cristina Kirchner, on the one hand, says that she is not opposed to his continuing in office but, on the other, demands

that he open the purse

) do not think the same .

And they fear that a greater expansion of spending, at a time when pesos are burning in people's hands in the face of

inflation of 50% per year.

With the comings and goings of ministers, the dollar stocks are one of the few certainties that Alberto Fernández can cling to.

Inject pesos in

bonuses for retirees

, for salaried employees or increases in the Universal Child Allowance or in another


(Emergency Family Income) in the attempt to

fill pockets

to seek to recover votes in the legislative elections of November 14, in addition to being A foreseeable move may have

inflation and dollar costs

to watch out for.

The Central Bank has placed in the banks

Liquidity Letters

(Leliqs) for $ 4 billion that act as a containment dam but, at the same time, constitute

a mountain of immobilized pesos

that at some point will have to be dismantled.

Will they do it based on an inflation that liquefies it?

As is logical in a political letter, the Vice President does not stop at how Guzmán achieved a fiscal adjustment in the first part of the year that, although partially, would have contributed a

grain of sand

to the inflation of the previous month (2.5%) start with 2 and not 3 as usual.

For the economists, the minister

managed to close the accounts

for two results on the income side and one of the expenses.

In terms of income, the key was the

greater withholdings

on exports from the countryside (they grew due to the better international prices of soybeans and corn) and the wealth tax.

In expenditures, 50% inflation allowed the government to

liquidate retirements

and pensions,

a result that Martín Guzmán will never recognize

but which provided lubrication to his conversations with the IMF.

And what about the dollar?

In the midst of the uncertainty is the certainty that the government, in the face of adversity, will strengthen exchange control and if they demand it more,

the drip of foreign currency at the official price to pay for imports will decrease.


something not written those explicit enemies

that are the President and Vice


: a shot of the dollar would be a very bad companion in the face of the legislative election.

The Central Bank keeps the official at bay and eyes are on the

"cash with settlement"

that has been kept at bay ($ 174.28 on Friday) based on the sale of reserves.


gap of 90% between the wholesale dollar and the blue

mark a limit in terms of expectation.

If it grows, it would be difficult to think that it will not impact price formation until the end of the year.

The sensitivity of financial operators is divided between those who wait for a buying opportunity in the face of the government crisis and

those who cross their fingers

hoping that the irresponsibility of the policy does not cause even more damage to a population

embarrassed by the spectacle of the fight for the power.

Look also

Late on Friday, the Government issued a decree that enables it to spend the money of the IMF for the campaign

The complete letter of Cristina Kirchner against Alberto Fernández

Source: clarin

All business articles on 2021-09-18

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