Journalist: How do you analyze the agreement reached by the Government with the Monetary Fund?
Andres Asiain: My opinion is that the agreement, as it was reached, is not going to clear up the exchange rate and financial uncertainty over the economy, at least for the next two years remaining in the mandate of the Front for All. This is because the possibility or not of a default will be tied to the fulfillment of quarterly goals, which will depend on the opinion of IMF technicians and not on a decision by the national government. If the goals are not met, we will depend on the will of the technicians so that they continue to make disbursements in order to pay the loan taken by Mauricio Macri. In this sense, there is going to be a permanent uncertainty similar to that of last week, whether the tests are passed each quarter or not, whether a waiver is requested, whether it is approved or not, and that generates economic wear. On the other hand, there was clearly a political wear and tear on the Frente de Todos, which is going to end, in a certain way, its administration under the tutelage of the Fund.
Q.: How can the Government do to meet the reserve accumulation goals?
AA: It is very difficult because beyond the will or not of the Government there are factors that are not managed, such as the international prices of raw materials. That is a factor that totally escapes our decision at a national level. A fall in the price of raw materials disarms the forecasts for both reserves and collections. That is why I am very skeptical about the possibilities of strictly complying with everything that is signed because no matter how much the Government does everything, there are things that are beyond its will to decide.
Q.: Do you think this agreement can help stabilize macroeconomic variables?
AA: I believe that an agreement of this nature conditions the Government for the goals and quarterly supervisions. Instead of a one-time disbursement, to fully cancel the debt with that money and shift maturities, a long-term arrangement was made that conditions us. Any other decision would have generated, at least in the next two years, stability in most of the economic variables linked to the uncertainty linked to a default with the IMF. Afterwards, Argentina’s problems remain, such as the lack of reserves and foreign exchange, which the agreement does not solve because basically, the disbursements are to pay the debt and the additional one of what we paid last year, about US$4.5 billion. , apparently will be returned in installments.
Q.: How do you evaluate the impact in the short and long term?
AA: In the short term, the agreement does not remove the uncertainty of default because the next two years are going to depend on the approval of quarterly goals that depend not only on the good will of the Government, but on other issues. And in the long term, it does not keep us away either because in 2027 it will be necessary to return to the markets or agree to a new restructuring to be able to face the maturities that add up to US$15,000 million per year, which are unfeasible amounts if not through of the refinancing. In structurally economic terms, the agreement serves so that the next government has cleared three years of its mandate and that the last one begins to complicate it. And in political terms, it is a bad deal for the Frente de Todos, because it is most likely that the uncertainty will not go away and also the economic policy in the next two years is conditioned. In this sense, the Frente de Todos ends up paying the political cost of the debt taken on by the previous government, which seems like a trap for its project.
Q.: Do you foresee any impact on the dollar this year?
AA: It will not have a significant impact, since it will continue to rise and fall speculatively in the heat of rumors about whether or not they accept the fulfillment of the goals, if the collection increased or not, etc. It does not remove uncertainty and it will not have a definite effect on the parallel dollar.
Q.: What measures do you think the Government can take to reduce the gap?
AA: It is in a very difficult context because the greatest opportunity to raise dollars and intervene in the gap were the years of crisis, the first two years of the administration. Where, due to the crisis itself, there was a significant external commercial jump, with a jump in raw materials and tourism stopped, then the deficit decreased a lot. However, in those two years when it was time for the stop where the dollars were pooled to finance, we had a permanent exchange rate run that caused us to lose foreign currency, so now that it is time for recovery, it is difficult to think of measures to stabilize the dollar. parallel. I think we are going to live with currency tensions for a while.
Q.: In relation to inflation, what measures do you think can be taken to reduce it?
AA: Our vision of inflation from the Scalabrini Ortiz Center for Economic Studies focuses on its inertial component. The key to the failure of the various programs is that they have not taken into account the inertial elements of inflation. Indexation in rents, interest rates when borrowing, which are now going to increase as foreseen in the agreement, salary expectations and price agreements between suppliers make up a dynamic where the inflation rates of the past are projected forward. Any program that does not consider these inertial elements will be limited to administering specific shocks without addressing the underlying problem and will not achieve the objective of reducing inflation permanently. A policy that aims to eliminate inertial inflation should erase inflation expectations. One way to achieve this is through a temporary freezing of the main prices in the national economy, creating a context of stability that becomes a new reference for subsequent price and income negotiations. In this way, it would be possible to reduce the inertial component of inflation, leaving a residue due to other specific causes such as seasonal issues, increases in international prices, etc.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
