“Winter is coming.” We will have to repeat it from now on. Winter is coming, no doubt. It must be said because of the president’s warning Milei, the arrival of hard stagflationbut also because in the recent visit to Washington, There was a lot of protocol greeting, fewer promises and little or no cash for Argentina.
The pilot episode of the series “Game of Thrones” was titled, precisely, “Winter is coming.” Given the events of recent days, Ned Stark’s phrase could well be a mantra to adopt. In the world of Kabbalah and the dogmas of Milei, the Stark motto contains the enigma of the times. This enigma can also be transferred to numbers.
On his recent mission to the United States, President-elect Javier Milei could not secure dollars to begin his administration and implement the plan that Luis “Toto” Caputo, future Minister of Economy, “sold him”. On the one hand, he was not allowed to meet personally with two central actors in his stabilization plan: Kristalina Georgieva and Ilan Goldfajn. IMF and IDB, in that order, left the forum. On the other hand, it has not yet been able to secure resources from the investment funds.
Few dollars, and many adjustments
In Washington, there was a meeting between Luis Caputo and Nicolás Posse with Gita Gopinath, the Fund’s number two. The director of the Western Hemisphere, Rodrigo Valdés and Luis Cubeddu, joined that meeting., expert in the program with Argentina. The answer came on TV: in an interview with the Reuters agency, Georgieva maintained that she is “very interested” in supporting Argentina and anticipated that the country could be a candidate to receive financing from the Resilience and Sustainability Trust Fund (RST). , for its acronym in English). Although the figure is meager for local needs (approximately US$1.2 billion), there are two compelling pieces of information that did not go unnoticed by the delegation: that the loan is for countries that recognize that there is global climate change (Milei has renegade on this issue) and, on the other hand, that Georgieva’s statement implies that there will not be, in the short term, other resources available to Argentina. In fact, and as will be seen in some paragraphs, Caputo hoped to get some sign that the IMF could disburse to the country the US$ 10,000 million that had been “pending” from the Stand By credit taken opportunely by the former president’s government. Macri and that had not been disbursed at the time.
IDB, CAF, IMF, everything works
On that route to look for money in Washington, Milei’s future cabinet was interested, as was said, Also explore how many resources would be available at the IDB to begin the management. Other windows were also probed on the way to the airport: before leaving the United States, Caputo and Posse met with Carlos Jaramillo, vice president of the World Bank, and Alfonso García Mora, vice president for the region of the World Bank’s International Finance Corporation.
In the decision-making circle of the future government they think that the political signals and offerings made, both in New York and in the White House, should have some future effect. Specifically, the grocer’s account carried out by Luis Toto Caputo did not return to the country with significant figures. But why is this relevant?
The “Caputo plan” and the ejection of Ocampo
There is a paper. not so secret. But yes, key, given the circumstances. Luis Caputo himself signed it a few months ago on the letterhead of Anker, his consulting firm. In May of this year. He talks about dollarization, the necessary adjustments to the official dollar and other issues. And, to put it in synthetic language, There he maintains that, perhaps, it is advisable not to denigrate it too much, that one never knows when one may need to resort to it. Referring to dollarization: “it is an alternative that is difficult to implement that requires a complex legal and financial architecture, but not impossible to carry out,” wrote Caputo.
At that time, While everyone Together for Change was throwing stones at Milei’s dollarization flag, Caputo put his opinion on the table and with that he conquered the León del Abasto. “The backbone of the next economic program,” says Caputo, “must be fiscal balance. It is important to understand that the economic problems that the country has suffered for decades have their origin in the fact that the State consistently spends more than it collects. Inflation, the dollar or debt crises are the consequences of the way the deficit is financed”, he points out.
Leliq and the grocer’s account
That’s where the theme “Leliq” comes into play, so mentioned by President Milei. Caputo warns in the paper: “The abuse of financing the fiscal deficit via monetary issuance that occurred during the current administration has resulted in the accumulation of a stock of remunerated liabilities on the balance sheet of the Central Bank (Leliqs and Pases of the BCRA) that represents a threat to economic stability.. The option of dumping those pesos in the market could plunge the country into hyperinflation…” says the report.
Needless to say something relevant: one of the efforts of the brand new economic team is precisely to convince the banks. However, for now, the entities are fleeing the Leliq. Last Friday, Caputo had met with the banking groups and explained his plan to rescue those letters.. Response from the banks? In the following days, entities continued to switch to Passes, that is, short-term bills. Furthermore, last Tuesday, banks renewed only 23% of what was due. Disarmament at full speed.
The sources consulted point out that Caputo’s dollarization plan convinced Milei, while Ocampo’s “was very nice on paper, but he couldn’t get the dollars necessary to do it.” Putting it fast, Caputo made an account that appears at the end of the document: “if there were USD 12 billion from the market, USD 4 billion from FGS assets and USD 15 billion from the IMF, there would be financing available for a total of approximately USD 31 billion,” he says. the future minister. And he points out that this would help him repurchase a part of the monetary liabilities, to which “an important fiscal adjustment” would have to be added. The paper maintains that we must “achieve a financial fiscal surplus” of 2.5% of GDP, that is, it would imply an adjustment of 7 points of GDP. That’s what President Milei is working on. A strong tax reform is coming. And, of course, winter is coming too. As Ned Stark said: Winter is coming.
Source: Ambito
