Under seven keys, The Argentine mission that toured Washington last week stopped at the headquarters of the International Monetary Fund. The data, confirmed by sources related to the tour, deserves to be evaluated along with other elements of equal caliber.
Now, the Government’s idea is move quickly in developing a new program with the agencyafter the crossed messages that occurred throughout 2024 between Kristalina Georgieva and Javier Milei. Now it’s different.
Donald Trump’s victory to reach the White House – he will do so on January 20 – seemed to unblock any blockage of a speculative nature that could have nested in the Bottom. Now, leveraged on the good harmony between the Argentine and American presidents, Minister Luis Caputo intends a disbursement that could reach US$12,000 million along with the new agreement and an extension of terms that allows a more balanced repayment of the debt. Remember that in 2018 the agency approved a credit for the equivalent in Special Drawing Rights (SDR) of $57.1 billion, of which the country received about $44 billion. In this way, it could feed the ailing reserves without dismantling the “blend dollar” ahead of time and thus level out the dollars that feed the BCRA.
Basically, the Government’s intention, as President Milei anticipated yesterday, is to remove the exchange rate during 2025. When? It is likely that the IMF will determine, with your help, when that will be, which brings us back to Donald Trump. The multilateral organization’s bet is that the Government can validate the new agreement in the National Congress. They made that clear to the team they formed. Jose Luis Daza -Deputy Minister of Economy-, Pablo Quirno -Secretary of Finance- and Vladimir Werningvice president of the Central Bank in Washington.
“There was a comment regarding the need to have a budgeta roadmap that makes visible the Government’s intention to advance the tax reform,” said the source.
The Government decided to accelerate negotiations with the IMF
In any case, Minister Caputo decided to accelerate the negotiation. So, presented a kind of letter of intent with some projections that show the best moment on the financial front, specifically the demand for pesos and the prospects for an improvement in economic activity. According to sources, Economy anticipated the IMF that the activity data for the third quarter of 2024 that will be known in the coming days will give an interannual growth of 3%. “President Milei wanted the IMF to know that the recession is over,” the source said, “and that inflation will continue to fall.”
Although the Argentine negotiator Leonardo Madcur continued to work permanently in recent months, The political signal to move forward at good speed came only a few days ago. As anticipated in this column, there are many elements that the Government now has, numerous possible combinations that the IMF will offer to try to maintain performing a new agreement. The Government, on the other hand, seeks for inflation to equal the devaluation rate and for the interest rate to remain just above that mark..
The arrival of Scott Bessent and the anxiety of Luis Toto Caputo
On the other hand, the imminent arrival of Donald Trump to the presidency and Scott Bessent as Treasury Secretary arouses anxiety. It must be remembered that Bessent will be the government’s main economic spokesperson and represents the US globally on economic and financial matters in forums such as the G7, the G20, the IMF and the World Bank.
It was Bessent himself who, in a kind of premature revisionism, months ago He praised President Javier Milei and, in the same act, he criticized Peronism, which he compared on social networks to the administration of outgoing President Joe Biden. “Biden is chaining the American economy to debt. “I call it ‘Bidenism,'” he said in a debate broadcast on television.
And he added: “It is “Bidenism” and I think it is fortuitous that today we have the president of Argentina speaking and explaining what ruined his country: Peronism.” But he continued: “Bidenism is the beginning of Peronism. It is the State keeping control of the means of production and greatly increasing the debt,” said the future minister.
The markets, allies of the new management
The Government is excited. The signal given to the markets a few weeks ago – the appointment of Bessent – could further push up the price of assets on Wall Street and, in particular, Argentine bonds, and generate an additional reduction in country risk. Bessent is a man of the markets, something that should have a positive impact on investors. At 62 years old, he comes from advising Trump on economic policy during the campaign. The president-elect claims that his Treasury candidate is a defender of “ordinary people” and national industry. He is founder of the investment fund Key Square Capital Management and was the chief investment officer of Soros Fund Management. With a strong past in defending tax cuts, Bessent has just publicly asked Trump to replace the chairman of the Federal Reserve next year (one year before Jerome Powell’s term expires).
Will Trump and Bessent have a gesture with Argentina? In translation, Bessent’s word could be decisive in unblocking the future agreement between Argentina and the IMF. Yet, there is a question that needs to be asked. Bessent has just argued in a recent opinion article published in the Wall Street Journal that “Trump’s election fueled the largest single-day increase in the dollar in more than two years, and the third largest in the last decade.” It’s more. He maintained that he told Trump “the dollar loves you and we continue to increase the after-tax yield on American assets, and it will continue to do so.”
“Long-term interest rates are falling even with this growth shock,” Bessent said. “Tax cuts, deregulation, energy dominance, interest rates are actually going down, and the dollar is still going up.”
What benefit could an era of a strong dollar in the world bring to Argentina? The return of Donald Trump to the White House and the recent appointment of Bessent could promote a reflation process, that is, a return of inflationary pressure in the United States leveraged by the new president’s next economic policy.
There are numerous arguments that could herald a new cycle of inflation in the United States. The first, taxes. But also the increase in tariffs and the plan to expand public spending (deficit). Trump’s promises accelerated a moderation in expectations of rate cuts by the Federal Reserve (FED), which tipped a rise in Treasury bond yields, something bad for bond market yields. emerging. Thus, while the US government’s cabinet seems to be filled with political references that are complimentary of the Mileist administration, its policies in the portfolio – and the expectation that they will be applied starting in January – could negatively impact the Argentine economic cycle and the local financial front.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
