Javier Milei began contacts with the IMF
Meanwhile, the new president’s team maintained contacts with the International Monetary Fund (IMF), as confirmed Ambit. The negotiations were led by Nicolas Possefuture chief of staff of the government that will take office on December 10.
It should be remembered that, in practice, the agreement with the IMF is broken, which in its last report when it authorized the disbursement of US$7,500 indicated that “the next review is scheduled for November 2023.”
On that occasion the established goals had not been met, a situation that is also repeated now. And, surely Milei’s economic team will agree “with accelerating fiscal consolidation with high-quality measures focused on spending and income.
This will help eliminate monetary financing of the deficit, promote disinflation,” as indicated in the statement signed by the Managing Director and President of the Board of Directors, Kristalina Georgieva.
AFIP: who are the names that could lead it
One of the key positions of the next administration is the AFIP. And there are several people signed up to lead the collecting agency.
One of those in the race is Ramiro Marra, a close collaborator of Milei. Another is Santiago Montoya, former head of the Collection Agency of the province of Buenos Aires. Although they say that he is a friend of Milei, there are objections within Libertad Avanza due to Montoya’s proximity to Sergio Massa.
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For their part, they say that Macri would promote the appointment of Leandro Cuccioli who was at the head of the AFIP during the previous government.
Meanwhile, part of the original economic team that accompanied Milei remains on the sidelines, according to libertarian sources. These are cases of Roque Fernandez, former minister of management Carlos Menemhis vice, Carlos Rodriguezand Dario Epstein.
However, in this last case there are those who rescue Epstein as a possible candidate to design tax policy, since in addition to his expertise in international finance, he is tax specialist.
The inheritance that Javier Milei receives
Beyond the strong influence that Milei will have on his management, the appointment of the new Minister of Economy is key at a time when the new government will have to face the correction of different imbalances that the economy faces in a complex social context. In this regard, in its latest update, the Torcuato Di Tella University calculates that 42.9% of Argentines are poor.
But this data is more worrying if we take into account that it is recorded despite the fact that different prices in the economy are delayed. Repressed inflationtaking mid-2019 as a reference, around 35%, according to Ecolatina. At that time public tariffs did not cover 100% of generation costs, but they were not that far off either, there were no price controls nor stocks.
The new administration will take charge in a context of unleashed inflation. According to the forecast of private analysts, reflected in the latest Market Expectations Survey (REM), 2023 will culminate with a price increase of 185% and they predict that Twelve months ahead, in October 2024, it stands at 203%.
This in a context of economic recession, largely as a consequence of the severe drought that affects the countryside. The analyst consensus expects a 2% decline in the Gross Domestic Product this year compared to the previous one.
Precisely in the external sector is where a good part of the imbalances are concentrated. Private estimates show that the net reserves held by the Central Bank are negative by around US$10,000 million and importers calculate that the debt for purchases abroad increased by US$20,000 million above the normal flow of financing.
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It is estimated that the year’s trade will be negative by about US$6.5 billion. The good news is that, once the unfavorable weather conditions were overcome, The result between exports and imports would leave a favorable balance of about US$9.9 billion in 2024.
One of the positive data presented by the situation is the relatively low unemployment rate, which stands at 6.9%. However, activity would fall 1.3% next yearaccording to Latin Focus Consensus Forecast and the unemployment rate would reach 7.3% in the first quarter of 2024 (according to REM).
Most economists consider that the deficit of the Argentine State is one of the most urgent tasks to be resolved. The primary deficit would reach 3.2% of GDP this year, rising to 5.4% when debt interest payments are added and reaching exorbitant figure of 14.4% when the quasi-fiscal deficit of the Central Bank is addedaccording to the calculations of Ramiro Castiñeira and Samuel Kaplan of Econometrica.
The BCRA imbalance is explained due to the growth of the LELIQ plus the paid passes that today represent 3 times the monetary base (Until the end of last year this ratio had always remained below 2 and between 2003-13 it had averaged 0.5). In this way, what is accrued in interest on the stock of remunerated liabilities would be generating a new monetary base every 1.4 months. To take dimension, a year ago this metric was above 5 months and in 2020 above 25 months.
For now, Milei anticipated that he will not advance his dollarization project until the LELIQ problem is resolved.
Source: Ambito
