The economist indicated that “this not only constitutes the main anchor in terms of expectations regarding a shift towards a deepening of imbalances.” For Manoukian, the ratification of the agreement with the Washington-based credit organization “limits deviations both in the short term and in the face of 2023” in a context of lack of financing or the sharpening of the foreign exchange front.
The Ecolatina economist indicated that Batakis’ statements “reinforce the commitment to the fiscal goal and the need to offer a positive real interest rate.” He also considered that “greater coordination and an important fiscal signal were shown forward to limit public spending” but he warned that “what remains to be seen is what support it will have for its realization because the market will want to see a certain realization first for begin to believe.
Lorenzo Sigaut Gravina, from Equilibra, Diego Bossio’s consultant, stressed that the new head of the Palacio de Hacienda is trying to give a “sign of austerity”, although he clarified that it is not clear if the scheme he proposes is “weight that comes in, weight that goes out because otherwise that is a war economy.” Sigaut Gravina clarified that a strict rule that adheres to cash availability as the sole principle, could not be applied to pensions adjusted by formula or to rate subsidies.
The Equilibra analyst raised some political doubts about the adjustment. As interpreted from Batakis’ announcement, in the remainder of the year the current budget appropriations would remain quotas, so that each minister of the Executive Power would have to move with that assigned quota. “The question is whether three months from now the ministers are not going to ask for the quota to be increased. What is going to happen in that case,” he said. On the other hand, he said that by trying to “indirectly” signal fiscal austerity, the government is seeking to somewhat stabilize the foreign exchange market, by showing that it will not have to increase the issuance of pesos to finance the deficit.
Daniel Artana, Chief Economist of the Latin American Economic Research Foundation (FIEL) tHe also raised doubts on the political front. “They are going to make a cash adjustment and unify the accounts of the public sector. The big question is whether the vice president (Cristina Fernández) is going to support it,” explained Artana. who added that “the question is whether they will comply with this.” “With this the deficit drops to zero. The question is whether this is sustainable. as well as the rates since the vice president is reluctant to this type of measure, ”she indicated.
Regarding the foreign exchange front, Artana recalled that Argentina promised before the IMF not to appreciate the exchange rate.
Gabriel Caamaño, from the Ledesma consultancy, said that Batakis seems to have announced a “zero deficit cash basis” for which he considered that it is necessary “to see in practice and how it is defined.” “If it is a discretionary implementation, the announcement will not have much effect, “he warned.
Regarding the modification of the Financial Administration Law to include more agencies in the budget under the single account system, he maintained that “at time zero it adds more resources than expenses.” “Would the result improve with a budget modification? You have to see it finished”, Caamaño wondered..
Meanwhile, Miguel Kiguel, head of the consulting firm Econviews, indicated that “Batakis announced that he was leaving at positive real interest rates.” “With average inflation of between 5 and 6% or more, it requires nominal rates of more than 60%, and that is conservative. Shall we go there?” asked the former finance secretary.
A social network account Twitter, Jotatrader_ok reflected more clearly what market operators are saying at this time. ”I don’t know if he spoke well, not if he said something good (in relation to Batakis). What I do know is that he didn’t say anything bad, and that’s already good”.
Source: Ambito
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