“While awaiting the details and the new economic measures that will be announced in the coming hours and days, our first impression is that the announcements once again lack the necessary encouragement and consistency that the current challenges demand, remaining very far from what the stabilization plan would require in the current macroeconomic situation“, large JPMorgan. Later, the North American bank considers that “In the face of urgency, we continue to characterize the current political response as a patchwork effort, lacking the consistency and breadth necessary to stabilize the economy”.
The focus, analysts say, is on politics. “So far, the government’s political coalition has been characterized by belated decisions and a trial-and-error style. This makes a credible compromise on the face of it difficult, unless accompanied by what could be seen as politically costly measures going into an election year.”, the Morgan document says.
Both in the case of JPMorgan and Goldman Sachs slipped the need to carry out a devaluation of the official exchange rate. So says the Goldman report: “Argentina needs a more conventional and disciplined policy mix to rebalance the economy, and that means, first, establishing a credible path towards structural fiscal consolidation and an exchange rate that allows itself to reflect macroeconomic fundamentals, which would require a bold reduced repression/financial control”.
Yesterday, the Minister of Economy was emphatic about the exchange rate: “The only thing that devaluation shocks produce is poverty and an enormous transfer of resources”. One of the axes of his management will be to strengthen the coffers of the Central Bank and with that gain muscle for economic policy and not advance in a devaluation of the currency. The same thing was repeated by Miguel Pesce, president of the BCRA, minutes after the end of Massa’s press conference in the microcinema of the Palacio de Hacienda.
The Brazilian bank BTG was much more precise in its criticism, because at each point he opposed his harsh reading of the ads. First, he focused on the fiscal deficit/monetary financing pair: “Massa seemed to recognize the fragility of the context, but his announcements had no substance: the 2.5% deficit target has no measures to support it, and the freezing of BCRA financing has no alternative sources of financing”.
“The plan is probably to exhaust the banks’ share of Treasury sales, so it expands via Repo/Leliq instead of direct transfers, with an identical result.”, they analyzed. On the side of reserves, -continues BTG-, “the measures to encourage exports were minor, they only anticipated exports, without exchange adjustment”.
Regarding the announcement of the Repo, btg Maintains that “will likely be prohibitively costly, requiring collateral for at least 10 times the cash obtained”. Regarding this point, an official who will accompany Massa in his management told after the conference that the Repos could be for the repurchase of public titles (taking advantage of the current low parities) or for the strengthening of reserves. The decision of which line is taken will depend, they assure in the Massa environment, on the interest rates and the terms of the operations. The intention is that the rates are in the single digits.
One of the latest alerts btg It is about the exchange offered by the Ministry of Economy for all securities maturing in the next 90 days for new instruments with a June/July 2023 term.The attempt to offer a “voluntary” swap of short-term bills for longer bonds seems pointless and should be read as a warning of a future restructuring, despite his words to the contrary.”.
Source: Ambito
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