The intrigue over the name of the future mandate, given the parity that the results of the elections showed August primaries (STEP), triggered uncertainty in local markets due to the different economic proposals they have presented. Among the politicians with the most chances, the liberal Javier Milei proposes dollarize and close the central bank (BCRA), the Minister of Economy and official candidate, Sergio Massadefends the weight, and Patricia Bullrich goes for the bimonetization.
Dollar: for the market, the devaluation was absorbed by inflation
“While the Government expands spending and the imbalances in the economy grow, the inflation he already ate the post-STEP devaluation jump. More pesos, less dollars and a BCRA bankrupt will accelerate the crisis in a context of greater political uncertainty, putting pressure on the exchange and inflation front in the coming weeks,” said Esteban Domecq of the consulting firm Invecq.
“In this electoral scenario, there is no way to execute or plan a stabilization plan; Everything is left for the next president, and whoever is elected, he is going to have to adjust to reality much faster than he thinks. The mere choice of someone does not seem to generate a credibility climate to have a honeymoon,” said Javier Timerman of Adcap Grupo Financiero.
“The government continued with its cataract of electoral advertisements that translate into a ‘small money’ plan that will try to capture votes at the cost of greater deficit and, therefore, monetary issue. A very dangerous combo for an economy that is contained based on a rigid exchange rate regulations that prevent access to dollars and virtually closed imports,” said the IEB Group.
Imports: the market foresees more restrictions
“The Government’s attempts to generate (electoral) adhesions at the last minute would have a fiscal cost estimated at around 1% of GDP, contradicting commitments to the IMF and economic logic,” VaTnet Financial Research reported.
“The Government is trying to advance measures that seek to compensate, although in a very unequal and arbitrary manner, the loss of purchasing power originated in the inflationary acceleration. Some of them are short-term and will run out after a while, others, however, aim to introduce new rules permanently (…) although without considering ‘general balance’ criteria, since no reduction in expenses is foreseen for its financing,” said the Mediterranean Foundation.
“Many companies, since they cannot dollarize, choose to advance the payment of bonuses and thus get rid of the burdens. The options to place these pesos today have negative real returns,” explained Gabriel Caamaño of Consultora Ledesma.
“The outlook is not going to improve. Argentina has a big problem with inflation, the fiscal deficit and we do not hear Massa give a solution,” said economist Ivan Carrino. “Suddenly, all of a tremendous generosity (from the Government) appears after the PASO (…) but it is bread for today and hunger for tomorrow, someone has to pay for this disaster,” he said.
“We could be facing a trade deficit for all of 2023 higher than the projected $3.4 billion. However, everything will ultimately depend on how much the government decides tighten restrictions not only in terms of import payments but also restrictions on accrual flows, in a context of strong exchange pressures,” said the consulting firm ABECEB.
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