“Argentina repeats its crises over and over again, there is a vicious circle of wanting to lower inflation through an exchange rate anchor, not doing it with other policies, and banking and There comes a time when the pressures to devalue and explode. To get out of that cycle, it is not easy. What it is going to require is that there be continuity of certain policies. ”
In this sense, Torres stated that the “role of the BCRA should be a priority to maintain a stable currency and lower inflation and that has to happen in several governments. No government of Argentina of any kind can ideology by itself and for a period to solve the problem of Argentina. It requires that there be certain things that are not debated anymore. “
The prospects that Argentina will not agree with the Fund are adverse: “The market assumes that Argentina will have to restructure its debt. We maintain Argentina’s rating at a level that is consistent with a default since the approval was made. restructuring. The country has an amount of debt in dollars that it has to refinance with the private sector that is impossible to pay without access to the markets. When the time comes if that doesn’t change, there will be a default. “
(Only) with the agreement it is not enough
A point to be highlighted by the analyst is the lack of political agreements. “Argentina does not achieve political consensus to lower inflation”And stated that the agreement to be signed with the international organization will oblige the government to present a medium-term program. At that point, he highlighted as positive the Multi-Year Plan that the government seeks to carry out in the first week of December – although, with reservations, he assured that more details remain to be known.
“The agreement with the Fund and what the multi-year agreement entails is a necessary but not sufficient condition for a credit enhancement. Indeed, there must be a clear signal that the government is going to maintain fiscal and monetary policies. Who wants to invest in the Argentina but it is necessary to finance abroad, the risk will be subject to the country risk, with these rates it is impossible. There is no investment that justifies borrowing at these rates in dollars. “
On the other hand, he announced that a good reaction from the markets is possible after the signing of the agreement but it will be short-lived: “It is possible that there will be an initial positive reaction from the markets with the agreement, and there is an agreement with a plan but the question remains To be if that plan is maintained. A plan with the fund will surely require a process of fiscal consolidation in the middle of an election. Is the government going to do it? The answer is not clear. “
Finally, he warned that the government will be forced to adjust its monetary policy: “What it reflects is that the reserves as they are now and the trend is insufficient to maintain the exchange rate as it is in the long term. In the long run, the pressure is that you have no choice but to devalue. At this rate, sooner or later there is going to be a devaluation. ”
Source From: Ambito
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