President Javier Milei made explicit the request for financing by US$15,000 million to lift the stocks. Although he suggested that if “someone” put that amount in the stocks the economy “takes off,” he later admitted that the IMF could be a creditor. Analysts indicate that the opening of the stocks would have a more complex operation and that the organism I wouldn’t be willing to lend that amount.
The president’s statement came within the framework of his first television interview after the controversy unleashed by the salary increase for him and his officialswithin the framework of an adjustment program.
Entering mid-March, Milei is repeatedly asked if he sees the possibility of removing the stocks in the middle of the year as feasible, considering his strategy: April or May could mark the turning point between the dizzying decline of the economy and the recovery process.
“I prefer to play it safe, as the Fund says, and target it in the middle of the year. Unless someone puts up US$15,000 million”. In that sense, when the LN+ channel asked him if the IMF could be a possibility, the President responded: “There are different alternatives, one could be the IMF”.
In turn, Milei assured that the monetary base is equivalent to 2.6% of GDPthe level of credit to the non-financial private sector is low and the percentage of deposits is 12% of GDP, which causes the economy to present a degree of demonetization such that it would allow the stocks to be opened. However, there is a limitation: the expanded monetary base (amount of money plus liabilities of the Central Bank) reaches 11% of GDP.
For the economist Gustavo Berit is positive to accumulate reserves, US$8,500 million since the inauguration of the ruling partybut not enough to lift the stocks because “the BCRA balance sheet remains to be improved.”
Regarding possible financing from the IMF, he understands that “it will depend on the economic roadmap,” but the expansion of credit by the organization “seems unlikely“, although it assumes that it could be compensated with access to external credit and/or direct investments. Milei works on this point when seeking the approval of the Large Investment Regime through the Omnibus Law.
In any case, the inflow of foreign currency could not materialize by expanding the current credit by US$ 45 billion, but rather by generating a new one. In that sense, for Hector Torres, former IMF official, “there may be a new program and some fresh funding”, although he estimates that less than the amount mentioned by the President.
In any case, the IMF has no intention of financing dollarization. In fact, Gita Gopinath, manager of the International Monetary Fund, specifically maintains the request for “consistency of monetary and exchange rate policy“.
The President himself admits that opening the stocks implies “stopping issuing and making the pass rate 0%.” That could have a serious consequence: “The portfolio switch can give me a run. “I prefer to play it safe and aim for it in the middle of the year.” However, he insisted: “Obviously, if they put in $15 billion, I’ll open tomorrow and the economy takes off.”
According to Pablo Besmedrisnikdirector of VDC Consultora, to the extent that inflation follows the path of deceleration, exchange rates approach the official dollar, the increase in reserves is consolidated and the perception of risk is restricted for two or three months, the exit of the stocks “will be more and more possible”.
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In any case, the specialist understands that the opening of restrictions is a path with vicissitudes: “Any leap towards the exit of the stocks implies moving on a risky path, in which any political setback or a drop in the demand for pesos can generate a shock.”. Likewise, he understands that the macro conditions are already being generated so that, eventually, some external private financing appears.
But the Fund, which intends to eliminate the preferential scheme for exports at the end of June, “Try to offer dollars only if they are focused on a stabilization plan, and not on adding reserves to operate as firepower in the face of exchange volatility”, highlights Besmedrisnik.
In any case, already during the Macrismo the IMF funds “were used specifically for those purposes” and “It could not be ruled out that it happens again.”.
Lastly, for Paula GandaraCIO of Asset Management at Adcap Grupo Financiero, the organization itself led by Kristalina Georgieva “also assesses the risks of a potential deal”, which is why Milei himself “prefers to play it safe.”
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Source: Ambito
