What for many would help to give him a clean and jerk and start a virtuous path to economy, the government would be emboldened in the politics. A global context liquidity, prices of commodities up and China growing -it is the only power whose GDP rose in 2020-, it would help La Rosada to delay or even step on economic decisions in order to minimize the political cost ahead of the elections and see after october as follows.
The alternatives are listed on the board. Since postponing increases in rates (or give as little as possible), going through uploading games of the spending above what Martín Guzmán planned, accumulate less Bookings as planned and even sign with him IMF or even the extreme of delaying the payment of one of its maturities.
All these options run through the same Red thread: stimulate demand. Mauricio Macri spent half a point of GDP on ANSeS loans in a quarter in 2017. Why wouldn’t this government do it? More, without the IMF.
“Today the chances that an agreement with the Fund will only occur in 2022 or at least after the legislative elections, grew”, says the latest work of the Econviews consultancy directed by Miguel Kiguel and is titled “What if there is no agreement with the Fund?”. A government figure admits it. “You have to think of something like that, the probability is not 0“.
After agreeing to pay the debt with the private parties, the Government made a formal request to the IMF to enter a Extended Facilities program. The Ministry of Economy works with a horizon to get an understanding around March. Although in the last time that urgency seems to have diminished.
He Background, for his part, he knows two questions about Argentina.
FirstIts authorities face no less than a challenge: an Extended Facilities program is a ten-year understanding and they lack the power to guarantee the Board that if the Government changes, the agreement will continue to be strictly respected. Guzmán says the agreement will go to Congress. But Argentina showed that the laws are short-lived.
Gerry Rice, the Fund’s spokesman, seems to see this when asked about Argentina earlier in the week. “The authorities continue working on the design of their medium-term economic plan and discussing the specific measures”. Is Guzmán in a position to translate a multi-year path into an excel file without leaving it shortly after, as did Nicolás Dujovne?
Second, the country has to pay two installments this year, one of them before the elections (in September for about US $ 1.8 billion). If the agreement is signed, a bleeding in the reserves would be avoided. But if an understanding is not reached, could Argentina postpone that payment?
Argentina did not pay a capital installment to the IMF in 2002. And in 2004 Nestor Kirchner speculated until the last minute, after threatening not to do so, something that caused a fight between the President and Anne Krueger who answered him through the media, something that Kirchnerism detests. Kirchner had exposed Krueger to the Board of Directors and that caused a sizzle.
There was one more chapter between Kirchnerism and the IMF. It was in 2009, just after the government lost the elections and in the middle of a global recession, like now. Cristina Kirchner changed the Cabinet and Amado Boudou began a reconciliation roadmap with the IMF that included the visit of a mission to Buenos Aires. Kirchner called Boudou to Istanbul, where he was at an Annual Assembly, and immediately demanded that he deny that (true) information. Agreement with private companies, CIARI and the Paris Club, yes. Article IV and mission noKirchner said.
It will be a risk for Alberto Fernández to play to cross the desert of 2021 without filling the tank in Washington. There will be financing needs 14% of GDP this year, estimated former Finance Secretary Daniel Marx. The BCRA would issue an amount equal to 3 points of the product.
“Without an agreement the cost of indebtedness for companies and the dollar gap will increase”says Ricardo Delgado, director of Analytica. “Uncertainty continues to permeate every business and investment decision. The milestone in the next month and a half or two months is the agreement with the IMF“.
Delgado points out that the most sensitive aspect in the discussion will be on reserves, not so much on fiscal matters. The agency will monitor and require a target on the Dollars that Argentina accumulates to ensure that it will pay you. But where will those dollars come from if not from the field? “The Government must ensure that the dollars are produced by the businessmen and that they pay the IMF with them. It’s hard”.
Econviews estimates that the BCRA can add US $ 2.5 billion in reserves this year. The bank has US $ 14,000 million in liquid bonds to lower the MEP and CCL. “With this and soybeans at US $ 500, macro imbalances tend to last longer without derailing as the excels often say”, says Federico Furiase, director of Eco Go.
source https://pledgetimes.com/will-kirchnerism-dare-to-cross-the-desert-of-the-2021-economy-without-the-imf/
Disqus comments