“The Budget, Like the multi-year program, it will be what Argentina offers to the Fund, so it is important to achieve a consensus among the different political sectors, and thus improve the country’s position vis-à-vis the negotiation with the IMF. At the same time, I think there are probably some modifications to the bill, but that will be tied to the consensus that is reached with the different sectors. I think the opposition will be interested in reaching an agreement ”. Alfredo Schclarek Curutchet currently held to investigate at CONICET.
“The numbers that Martín Guzmán raises are subject to what can be arranged with the Fund, so I believe that reaching an agreement is urgent, since it will influence the external situation that the country has in terms of financing and trust. Then you have to evaluate if it is possible to comply with the proposed numbers, so there will probably be modifications ”, said, for his part, the economist Augusto Soberón.
Both analysts also referred to the Fund’s request for a reduction in the fiscal deficit and the discussion that is still closed for the Government on how to do it. “If it is slowed down, the decrease could be achieved without having to make an adjustment on spending, because as the economy grows, tax collection increases. But if it is done faster, some kind of spending adjustment may be necessary and there the government does not have much margin ”, analyzed Schclarek Curutchet.
“On the other hand,” he pointed out, “in recent days the BCRA interest rate, since perhaps the Fund may ask for a higher interest rate, because with a rise it becomes more attractive to save in pesos. I believe that the issue is delicate, because Argentina, unlike developed countries, has a Central Bank with remunerated liabilities, such as leliqs or passive repos. In this sense, when one increases the rate, the quasi-fiscal deficit increases, because the interest rate that must be paid to passive leliqs and repos increases. Consequently, the system’s liquidity in pesos increases, which can translate into exchange pressure and eventually higher inflation “
What will happen with spending is key, said Soberón. “The issue is that, in my opinion, the government does not want to modify spending in terms of social assistance while the opposition has a different view. The reduction of the deficit is an important debate because it is difficult to maneuver taking into account the Argentine situation in terms of conditionality and in terms of financing ”, the economist declared.
Dollar
The exchange rate is another of the central points of the discussion, both with the Fund and at the parliamentary level. “It is important to lower that gap, but not by raising the official exchange rate but by lowering the parallel, the financial dollar. If one looks at the Central Bank’s indicators about the competitiveness of the economy, the official exchange rate is not behind. In this situation, narrowing the gap by increasing the official with a discrete devaluation will not bring improvements, but what it will do is increase inflation and financial instability, damaging the export industry, ”said Schclarek.
For Soberón, the important thing for the long term is to find a way out of the exchange stocks. “It is not healthy for any economy to keep a stocks for so long. So once it is possible to settle with the Fund it is necessary to see how to solve the problem of the stocks “.
Source From: Ambito
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