From Poggetto, one of the most respected analysts in the City, referred to the economic news and financial of the country, considered that although it was necessary to maintain the restriction due to the conditions in which Argentina was found, he also stressed the harmful to continue extending it over time.
“The balance sheet was cleared Central Bank But by moving the debt from one place to another, the country risk remains at 1,500 basis points and there is no financial program, so the dependence on the cepo remains almost the same as when it arrived Milei”, the economist said tonight in an interview with Cenital.
“Fiscal consolidation was a necessary condition. Fiscal accounts had to be closed and a program to clean up the Central Bank had to be implemented. This had to be done with capital controls,” he continued, but pointed out that the Government’s initial objective “was to dismantle them and to do so an alternative anchor had to be built.”
In his opinion, this anchor “included part of the fiscal consolidation, with a viable financial program, which requires that the country risk be lower.” However, after nine months the Government still seems unable to find a way out of the restriction.
Marina Dal Poggetto warned about the exchange rate lag
In addition, The economist explained that after having paid “a very high cost with the initial devaluation”, the economy is once again pushing the exchange rate to leave it behindwhile pointing out that, despite the reforms initiated by the Government, “the Central Bank remains bankrupt.”
“We have been going through 20 years, from Néstor (Kirchner) until now, with monetary underfunding of the BCRA, between profits, temporary advances, non-transferable bills and some transfers of hands. Thus, between pesos and dollars, at the official exchange rate, US$300 billion were used. That is half the Product. Of that, US$100 billion were real dollars and US$200 billion were monetary issuance of pesos,” he summarized regarding the situation that the current administration found: “Basically, the Central Bank’s balance sheet is broken by the abuse of monetary financing of the fiscal hole.”
Then he qualified the cepo as an anomaly that “does not generate a gap, but gaps.” He explained: “There is an incentive to buy all the cheap dollars that are in the system. The problem is that no matter how many dollars the economy generates, there will always be a shortage. The distortions are very large.”
On the other hand, he referred to international projections that anticipate a growth of GDP in 2025, after the fall that will culminate this year. According to him, Recovery expectations would be tied to an economic policy maneuver that has a high cost for Argentina.
“No matter when we talk about it and no matter what color the political sign of the party is, always in an election year (in 2025 the legislative elections will be held) the dollar must be delayed to lower inflation and grow a little. But this does not help to win elections. In the end Scioli lost in 2015 and Macri lost in 2019. The negative thing is that each of these processes requires an enormous amount of dollars”, he stressed.
“The program of the agreement with the IMF It was US$44 billion that allowed us to try to reach 2019 and Massa another $20 billion in commercial debt and $10 billion in negative reserves were consumed,” he said.
Dal Poggetto questioned Javier Milei’s dollarization plans
As for the plans of Javier Milei to realize a dollarization, Dal Poggetto expressed his disagreement. “At some point we must start building a currency. If this is not done, Argentina will be in a state of chronic stagnation. The discussion is whether we build a currency or whether we borrow the reputation of another Central Bank, which is a form of convertibility,” he said.
“Convertibility is a very effective process as an exchange rate anchor in the short term, but it becomes a problem when instead of capital coming in, capital goes out. The ideal would be to build a currency like normal countries have.but for that it is necessary to have financing, otherwise there is no way to cover the fiscal gap,” he said.
Source: Ambito
