I think, therefore I am. The doubt is installed: the head of the Central Bank, Santiago Bausili and Minister Luis Caputo, have pointed it out to those who want to listen to it: At some point, inflation, the crawling peg and the interest rate will have to run at the same speed. What is that speed?
Will the economy and, above all, those who must live their lives according to the conditions it imposes hold? How much recession, depression and unemployment will be necessary for the plan to work?
Yesterday The Central Bank lowered the reference rate. Thus, the monthly effective yield (TEM) becomes 5% monthly and the annual effective rate (TEA) is 79.6%. The monthly data is far from the 2% crawling peg, and still several meters away from the 9% that, it is estimated, April will show in terms of inflation. All in all, the idea serves to organize the anarchic presidential thought, embraced – or burned – now, to the fate of the economic plan and converted into the minister’s defense shield, a complete institutional novelty.
Heterodoxy to power. Does the BCRA assist the Treasury?
The key is that, for the rate, inflation and devaluation to coincide, The Government seems more willing to use all the heterodox tools, when verifying that the monetary turnstile is not enough. That is why the minister’s meetings with the different productive and marketing sectors to soften the price escalation. Interventionism and price agreement 2.0.
Speaking of heterodoxy, does the BCRA continue to assist the Treasury? You could say no… but what type of operation is the Government sponsoring at this time? There is a lack of resources in the Treasury Palace and since the Central cannot participate in the tenders, there are tricks that have been put in place. For example, in the secondary market, Santiago Bausili buys the bonds from those who then enter the primary market to buy the tender from the Treasury. Indirectly, the BCRA serves as a counterparty to those who, otherwise, would sell their bonds, causing the price to fall and the rate to rise. Magic.
The return of the 90s. Neoconvertibility and adjustment
There is an additional piece of information that should be known and that helps to know what the Treasury thinks. Due to the conflict with the UTA, which brings together bus drivers, this week the employers’ chambers of the sector met with the Ministry of Transportation. Business owners were waiting for a definition from the Government to be able to validate increases in workers’ salaries, something that ultimately did not happen: more subsidies or an authorization to raise the rate? Neither one nor the other. The Government offered them a third way: layoffs and cuts in frequencies. Unemployment is the variable that, they think in the Casa Rosada, should rise exponentially to discipline joint ventures and give greater productivity to companies.
Wallet kills galán. Bopreal yes, dollars, later…
The procession goes inside. One of the weak points of the current economic program is, without a doubt, the negative slope that tax revenues have taken. Much more serious, because the Government plants the basis of its entire economic campaign there. In this regard, the opinion of the draft of the next Bases law achieved yesterday seems to enable some future relief. The deterioration of tax revenues as a result of the recession – a depression in progress – would enable new adjustments to sustain the financial surplus.
However, not everything is what it seems. Attention. In search of greater resources -pesos and dollars- The fiscal package being debated in Congress would give a certain legality bias to a potential fiscal rebellion by the powerful, that is, a virtual drop in tax pressure, regardless of fiscal indemnity for more than 10 years. What is asked for in exchange? That companies anticipate the payment of taxes on personal assets for the next five years. In the offer, a money laundering is added – without restriction of any kind – as a tool to repay the financial cycle in progress, where investors will look for a way out and crystallize the bet promoted by Luis Caputo.
LETES revisited. Pesos for dollars, the return.
It is known that, within the composition of the cuts, the Government’s debt with gas producers and electricity generators is one of the main ones. Yesterday, Minister Luis Caputo led a meeting at the Treasury Palace where he presented a proposal to cancel only the transactions of December 2023 and January 2024 through the delivery of public securities -BOPREAL- for an approximate amount of 600 million dollars in nominal value. This amount exceeds the financial surplus accused by the Government, which reflects the weakness of the positive balance on which the Casa Rosada was flagged. The move is reminiscent of the Treasury bills (Letes) in dollars that the Government of former President Macri delivered in exchange for the pesos, something that the BCRA does today with the Bopreal. Another piece of information that goes in this direction is that the BCRA confirmed yesterday that it is evaluating expanding the BOPREAL so that companies can pay profits and dividends to non-residents, an operation that was restricted by the stocks. Thus, an “exit route” is enabled, the same mechanism that was used for commercial debt, in addition to sucking pesos from the economy. That didn’t end in the best way.
Source: Ambito
