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The alliance between Cristina and Massa, the main anchor for the dollar


The support of the Vice to the Minister of Economy is a political support. Both know that an additional rise in the cost of living would affect the chances of the Frente de Todos in the October elections.

Every day that it does not rain, the forecasts for the losses of production and exports that the drought is generating worsen.

A report by the consulting firm


is alarming: "it is estimated that Argentina would lose

between US$16,000 million and US$21,000 million

of valued harvest this campaign and would suffer a decrease of between US$9,200 million and US$13,200 million in agro-industrial exports ".

According to specialists, this decrease in the income of foreign currency is impossible to compensate with other exports.

For example, it is estimated that the largest exports from the automotive and energy sectors could bring in some US$ 2,000 million.

It was due to the drought that the International Monetary Fund eased the goal of accumulating foreign exchange reserves by US$ 3,000 million for March and that it

"enabled temporary exchange measures"

(3 soybean dollars?) and it is for the same reason that La Cámpora and the former Minister of Economy of Axel Kicillof, Emmanuel Álvarez Agis raised questions about tax issues.

The statement from La Cámpora defended the pension moratorium questioned by the IMF and Alvarez Agis focused on the fact that if the Fund reduces the reserve accumulation target, it should also lower the fiscal surplus (by 1.9% of GDP for this year ) because it is evident that there will be

less collection


One proposes

to spend more

(only the moratorium would cost 0.4% of GDP) while Agis believes that the government could raise

the breach of the fiscal goal


Both sides are putting the proposal of the

Sergio Massa-Gabriel Rubinstein

tandem under pressure to comply with the deficit reduction path as a possible way to keep the exchange market within a certain calm.

There are three key cards in the economy that are turned upside down: the official dollar fell behind by 15% only in the last year,

the drought

implies a very strong and unexpected blow and the Central Bank's reserves are in decline and the "net" ones are in around US$ 2,000 million, a low figure even with the tightening of the exchange rate in recent months.

The government could get loans from international organizations, but experts say they could be used to pay for the US$2 billion in additional financing to the IMF.

They would be currencies that would enter through one account, but would leave through the same account.

So, the


is inevitable?

The numbers play in favor of some exchange rate jump, but politics in an election year is a very powerful argument.

In a sense, it could be said that the agreement between

Cristina Kirchner


Sergio Massa

constitutes the main exchange rate containment dam.

The vice president criticizes the fiscal adjustment and calls for an agreement to overcome the peso-dollar bimonetarism (was there no time since 2003?) but, like its main political arm, La Cámpora, they highlight the management of Sergio Massa.

To the point that they question the agreement with the IMF, but they do not touch the Minister of Economy.

Martín Guzmán, a former minister of her government, would have been destroyed


The exchange dilemma of the Cristina-Massa axis is concrete: if the official dollar rises faster, they would be giving a signal to encourage foreign currency settlement for exporters, but also adding pressure to food prices at times of skyrocketing inflation.

The vice president and the Minister of Economy calculate the damage that

an additional rise in the cost of living would cause on the chances of the Frente de Todos

in the year-end elections and they have fresh the story of the resignation of Martín Guzmán and its consequences on the dollar and inflation.

If neither of them wants to devalue and there are no additional dollars, the way to go would be to give more thought to the stocks to postpone the payment of imports and then the victim would end up being the level of activity.

Just as there is a "recalculation" regarding the income of dollars due to the drought, there is another on the possible reduction of imports that maintain a high correlation with economic activity.

A lower level of imports goes hand in hand with a reduction in activity, economists place the decline in GDP between 1% and 3%.

The sheds of the

fiscal warehouses

are full as never before of imported products that await their dispatch to the market and the authorization of the government to be able to be paid in the official dollar.

Cristina Kirchner praised Sergio Massa

for having stopped the "import festival" from the application of give and take that implies that companies agree to moderate the rise in prices in exchange for the promise of obtaining dollars at the official wholesale price ( $202) to pay for imports.

The prize is important for those who need to import and for the government in its attempt to somewhat moderate the rise in prices that continues to hit pockets hard.

Fiscal adjustment or failing to comply with the IMF? Delaying the dollar further so that it acts as an anchor against inflation or bringing it forward and favoring the liquidation of exporters' dollars?

The Cristina-Massa alliance adds pressure, but for now, it continues to act as a containment dam to bring some exchange rate stability.

look also

Alvarez Agis: "If these are the parameters, I prefer to break the IMF agreement"

The harsh reality of inflation versus the sweet fiction of price agreements

Source: clarin

All business articles on 2023-03-15

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