After the General electionsthe british bank Barclays They anticipated fewer risks in the face of the fewer possibilities that Javier Milei dollarize the economy, at the same time that it cleared up doubts regarding the IMF.
“We believe that the election result involves a reduction in tail risks, but also a smaller upward trend in Argentina’s prospects. We see a reduction in tail risks due to the lower probability that the dollarization plan in the short term progress, but we also see, in principle, a smaller upward path because we believe that it will be difficult for Massa to generate the positive confidence shock necessary to contain the economic cost of the much-needed adjustments,” he assessed.
“In our opinion, the possibilities of dollarization have decreased. Firstly, because the possibilities of continuity – that is, the re-election of the government coalition– seem much older today than the results of the primaries and the polls suggested,” he pointed out.
At the same time, he stressed that “if Milei wins, he will be forced to move towards the center and potentially regress in his dollarization proposal.”
“Implementing dollarization requires a strong consensus of society. In fact, it requires Congress to pass a law and, most likely, the need to win a referendum before that vote. And with Milei winning 30% of the votes in the first round, there does not seem to be consensus for a dollarization proposal that is too strong at this point,” she predicted.
Dollar: Barclays forecast for the official exchange rate
He also stated that “the exchange gap “should be reduced from last week’s levels.”
“As for the official exchange rate, The futures market entered the elections estimating a depreciation of 35% for the end of October, an additional 14% for the end of November and a jump of 92% for December,” he stressed, but highlighted that, with the latest result, “it is “These projections are likely to be revalued downwards.”
How the agreement with the IMF is going to be paid
Barclays also stated that a deal with the IMF before December 10, as planned in the latest review, is “unlikely”, particularly given that the Government was recently able expand swap line availability from China at US$6.5 billion,” he said.
However, he clarified that “a scenario of arrears with the IMF is unlikely”. “We hope that the government complies with US$4.4 billion in payments to the IMF during October-December with approximately US$1.4 billion in SDR still in the Central Bank and pay the rest using the China swap line”, he calculated.
Source: Ambito
