For Héctor Rogelio Torres, President Javier Milei’s announcement on Saturday morning is not accurate with respect to what the market expects. The Government confirms the objective to this newspaper: “Sterilization of pesos issued by purchasing dollars. Part of a monetary policy decision to achieve zero emission. The sale to sterilize will be done both in the MEP and in the CCL,” they clarify.
However, for the Executive Director on two occasions for Argentina -and alternate, on one occasion for Brazil- in it Background International Monetary Fundthe challenge is not focused on the sterilization of pesos, but on the accumulation of dollars. The Government is barking up the wrong tree“, warns the UBA lawyer.
The rise in country risk and the widening gap between the “official” dollar and the market dollar are clear indications that something is wrong. But the problem is not that too many pesos are being issued. The origin of the problem is that exporters are not liquidating enough dollars. It seems to me that the government is barking up the wrong tree.
Wasn’t the mechanism that the government is seeking to implement a cause of anger for the IMF in 2018? How might the measure be received this time?
I cannot speak for the IMF. But I am sure that the measures announced will not help increase reserves, which would make relations with the IMF much easier.
Do you think the International Monetary Fund could consider giving Argentina fresh funds? In this case, should Caputo respond to the request to eliminate the blend and country tax, among other reforms?
I think both the government and the IMF want a new programme. But I have the impression that they have not yet agreed on the objective of a new programme.
I believe that the IMF would prefer a long-term program that would serve to financially support the structural reforms that the government intends to implement. But it seems to me that the government is more interested in receiving an initial disbursement of dollars that it can use freely in the local exchange market (to buy pesos) and lift the currency restrictions.
The Minister of Economy focuses on strengthening the peso, Milei on dollarization. Caputo spoke of “benign issuance” prior to the announcement, and Milei always maintained that issuance should be eliminated for all purposes. Do you notice any disagreement between the economic team and the President?
It seems to me that this possible difference has been overcome. In its latest report, the IMF (paragraph 24) says that “it is the intention of the authorities” to move towards a competition of currencies similar to the exchange system of Peru and Uruguay, in which the exchange rate “floats” and the peso is the only legal currency. In all reports, when the IMF reproduces opinions or intentions of the authorities, it is absolutely obligatory to consult them BEFORE publication.
Are we far from getting out of the currency controls under this exchange rate scheme?
The exchange rate restriction can be broken by fair means or foul. I believe that the government has not yet found the freely available financing it was looking for in order to rebuild reserves and break the restriction with the capacity to control a currency run. I do not believe that these measures will help in that regard.
What is the market’s mood for investing in Argentina? At this rate, do you consider the possibility of breaking through the 1,000-point country risk threshold by 2025 viable?
A few days ago I was talking to a friend who works at a major investment bank. He told me that he receives many calls asking for information about Argentina, but not yet any concrete requests for investment.
Source: Ambito
