Moreover, Guzmán has not discussed it informally with economists from different currents and from the opposition, according to a consultation carried out by Ámbito.
In the Casa Rosada they are enthusiastic about the positive economic indicators that the Minister of Economy, Martín Guzmán, are giving them and are aware that the delay in reaching an agreement with the IMF could affect the growth path, official sources comment.
To get an idea of the complexity of the issue, in the period November of this year to March of next, there are maturities with the multilateral organization for 6,260 million dollars, practically more than the totality of the net reserves that remain in the Central Bank, according to different private estimates.
Last deal
The current situation with the Fund is similar to what happened in 2002, analysts recall. At that time, as now, there were low foreign exchange reserves and large maturities. But there are also differences for and against.
On the negative side, they point out that at the beginning of the millennium relative prices were more aligned than they are at present. The dollar had jumped from 1 peso to 4. Although the real exchange rate is currently far from the delay it had at the exit of the Convertibility, the 100% gap between the official dollar and the alternatives is a factor of tension that can hardly be sustained for long.
The rates weren’t that misaligned either. According to a study by the pxq consultancy led by the economist Emanuel Álvarez Agis, in the 2022 Budget project the reduction of energy subsidies in the area from 2.3% of GDP in 2021 to 1 is indicated as an explicit objective, 7% next year for which an average increase of 20% in the price would be needed (with a differentiated impact on the rate depending on how said increase is segmented).
The study also considers that the only anti-inflationary tool during 2021 was the use of the exchange rate and tariffs as nominal anchors.
Consequently, it projects that “inflation in 2021 will be in the order of 50% and constitutes a risk for 2022 given that probably within the framework of an agreement with the IMF the exchange rate will no longer be able to function as an anchor and tariffs they must increase if the budget’s primary fiscal deficit guideline is to be met ”.
He adds that “in a context in which unions are pushing to regain purchasing power, current inflation looks more like a floor than a ceiling.”
It should be remembered that in the last 3 years the purchasing power of formal employees has seen a persistent fall, of the order of 20%.
Both the exchange rate correction and the rate correction face the problem that “Argentina returned as of 2010 to a dynamic of chronic inflation, in the sense of Haberger (1981), who defines this type of process as inflation rates of 20% per year or more. for a period of at least 5 years ”, says the pxq report.
And he adds that “as Calvo and Vegh (1994) emphasize, the problem with chronic inflation processes is that, unlike hyperinflations, which are explosive processes that usually last for months, chronic inflations are relatively stable processes that can last for years. ”.
Both Haverger and Calvo and Vegh are economists who raise the need for stabilization plans in the face of inflationary processes.
Álvarez Agis’ consulting firm interprets the price freeze implemented by the Secretary of Commerce as “a short-term attempt to slow down the acceleration of recent weeks, but to attack the underlying problem there is no alternative but to think of an anti-drug program. inflationary. Price agreements can be a tool that is part of this program, but the nucleus to begin to decelerate prices must be to attack macroeconomic instability ”.
In favor
As an element in favor, Argentina is counting on the fact that it is negotiating with a leadership of the Fund that is “much more conciliatory, less orthodox” than the one that led the body in 2002 (these were the times of the economist Anne Krueger, famous for her inflexible positions).
The memoirs also recall that at the beginning of the millennium the country was finally able to achieve a stand-by largely thanks to the intervention of the United States. It remains to be seen if the same thing happens this time.
Despite this relatively “softer” negotiating attitude of the Fund, analysts consider that, in any case, the agency will demand from the Argentine authorities “an old-fashioned stabilization plan”, that is, with fiscal, monetary, exchange-rate goals, the definition of of a nominal anchor, among other requirements.
In the Fund’s history, there are some thirty countries that delayed or defaulted on their payments. Among them are Sudan, Somalia, Liberia, Peru or Honduras, that is to say, nations smaller than Argentina, which is also the IMF’s largest individual debtor today.
Fund studies demonstrate that the determinants of past due obligations to the Fund suggest multifaceted causes and encompass both economic and political factors.
IMF technicians bring water to their mill and argue that “on average, a country with past due obligations would have worse macroeconomic results” in terms of debt, inflation, international reserves, growth and welfare, than a compliant nation.
Source From: Ambito
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