While The market still digests the electoral defeat of freedom progresses In the province of Buenos Aires, different economists affirmed that The Government will surely support its economic course to the October elections. Forward, they mentioned that modifications should be made in monetary and exchange policy, A decision that would include a new negotiation with the International Monetary Fund (IMF).
Consulted by Scopethe economist of ACM Francisco Ricto He said that “the official line is that of continuity: there would be no immediate turn in economic policy, beyond possible political or cabinet changes that are not yet confirmed.” From the economic point of view, however, he stressed that “What does change is the stage”because “the market did not discount such a wide electoral difference and That naturally translates into pressure on the exchange rate“
Ricto estimated that “after October the key is not a change of course, but to gain political margin to sustain it”. In the economic one, “the government surely must give more flexibility to the exchange rate and reinforce the financing in pesos.” Otherwise, he added that “The fiscal anchor loses effectiveness and stability is more exposed, especially in a context of very high ratesreserves under pressure and a political risk that makes the entire scheme more expensive. “
Similarly, the economist of Schweber Melina Eidneradhered to the possibility that the Ministry of Economy maintain the current economic plan until next month. He held this media that from the government “They will reflect more for political assembly”. And he added: “I do not see them making big changes on the economic side, I think they will continue to have the inflationary deceleration as north and for that They will try to contain the dollar as much as possible. I don’t see a very abrupt change. “
Government’s fire power
Eidner said that “The band scheme is sustainable to the elections” Because the Central Bank “has enough firepower.” In Schweber they estimated that monetary authority has U $20,000 million of liquid reserves. “With that the Central Bank could grab and defend the band’s roof if necessary,” he said.
Ricto He estimated a similar number of liquid reserves to intervene, but stressed that its use “will depend on how far you are willing to sacrifice resources to sustain current dynamics.” In addition, he mentioned that the treasure “has deposits in foreign currency for some US $ 1,200 million“Although he added that”Practically that same amount expires from here to October with international organizations, which greatly limits its ability to intervention“
The Schweber economist also stressed that “They have room to intervene in what are future: A3 markets imposes an intervention limit of US $ 9,000 million And today we estimate that they would be sold around U $ S5.8 billion. There it also has space. “
For his part, the analyst of ACM He also stressed that the other instrument that the Government has is the interest rate: “We already saw that the exchange rate was held after the last strong rates, but Today the reference rate is at maximum of the last three decades, so increasing it further does not guarantee a significant effect on the dollar. It can serve to retain weights in the market, but the impact on the exchange front is probably marginal. “
Corrections to do and negotiation with the IMF
The director of Epyca, Martin Kaloshe held to Scope that it is necessary that the government begins to accumulate reservations: “As they did not, and in fact they politically pointed to the opposite, generated this that in July and August It was scored as a dollar risewhen that could have been handled much more quietly in previous months. “
On this point, he remarked that “Before the elections he intervened losing hundreds of millions of dollars to contain a dollar price that the market perceives as excessively cheap. “And deepened that,” more interventions in futures, the increase in lace to get weights that could go to demand dollars and the increase in interest rate at levels that were not had from the exit of hyperinflation, It is a cocktail that must be corrected“
Kalos stated that that “It also implies that the government sincere the exchange rate”because the dollar “market equilibrium is above what the government wants, what happens is that it now has the problem that That requires a negotiation with the IMF because he put a very low band“
For his part, Ricto said that “The expected thing would be some adjustment in the exchange-moneary policy (For example, one Review of exchange bands or a more active use of reservations), but for the moment the official message is continuity. “However, he stressed that”The substantive question is how much real margin has the BCRA to sustain that strategy without putting at risk the improvement of its balancewhich was precisely the axis of the new agreement with the IMF “.
In line, Eidner stated that after the October elections “You possibly need touches with the IMF endorsement”among which he mentioned as a possible option to upload the ceiling of the exchange band.
Rates and real economy
The economist also recognized that “They may have to do something with the interest rate”because “It was very high in real terms and that affects you in the real economy”.
For its part, Kalos He also mentioned the importance of lowering rates and “that the price of the dollar has been corrected so that he does not drown so much to national production with an overvalued dollar.” After that, he added, “You have to discuss productive policy, which is what this government never had.”
And deepened: “The only productive policy of the government of Milei It has been the Rigiwhich is obviously very focused, concentrated in large companies in few sectors and with the ability to make large investments. I do not believe that the Milei government knows or can do productive policy for its ideology, but at least correct the macro variables“
Source: Ambito
