For the entity, “the fresh funds” are as fundamental as the “consistency of the exchange program” that results from this arrangement.
The report, signed by El Economista Diego Pereiraindicates that “As relevant as the amount of resources aimed at capitalizing the Central Bank, it is the consistency of the future exchange arrangement.”
“The new level of net reserves after capitalization must be considered as a floor, on which genuine reserve profits must be generated,” he said.
He argued that “the additional fiscal effort of the Treasury when facing greater indebtedness with the IMF should have an economic return, providing a sustainable support for the amount of pesos in circulation.”
These profits would materialize in renewed access to financial markets and in the consolidation of a deflation process that promotes the reduction of nominal interest rates according to inflation.
In the document, JPMorgan’s reference also maintains the importance of releasing restrictions exchange For the Argentine government Start to receive foreign capital investments and the financial market is reactivated.
In this regard, he acknowledges that the lack of concrete definitions of the agreement caused volatility, but explains that “this approach is backed by a fiscal surplus, a rapid recovery of activity and consumption and a downward trend of underlying inflation.”
“We foresee that both investment and consumption will continue to drive the growth of activity, With a contribution of practically zero net exports this year, “says the report.
Source: Ambito
