Financial specialists warn about the sustainability of Javier Milei’s “chainsaw plan”

The financial conditions of the Argentine economy improved in February for the third consecutive month, but They contrast with a “galloping recession” and the continuity of the stocks.

This was stated in a report from the Argentine Institute of Finance Executives (IAEF), which highlighted that during the second month of 2024, the fall of the gap, disinflation, the rally in bonds and stocks and the recovery of deposits in dollars helped to the fact that the Financial Conditions Index (ICF, which measures that business entity) improved for the third month in a row.

In this way, the indicator moves away from the lows it reached during the 2023 electoral period, although the IAEF warned that “the financial euphoria contrasts with a rampant recession and the continuity of exchange controls.”

According to the report, the market “is a believer. From the prices it is deduced that the market trusts that the Milei Government will be able to carry out its reform agenda and this is reflected in the ICF.”

However, the IAEF warned that “There are doubts about the sustainability of the fiscal surplus, which is supported by the liquefaction of expenses and taxes on foreign trade, and by the exchange rate appreciation, although this is not reflected in the devaluation expectations that were reduced in February.”

For its part, external conditions also improved, due to low volatility in commodities and emerging currencies, but the most important thing for Argentina “is that rates go down – thinking about once again accessing external credit to refinance maturities in 2025 -” , the entity pointed out.

In this framework, the ICF for February went from -100.3 in January to -64.2 in February: it recovered 120 points from the November minimum, although it is still in the severe stress zone.

This is a worse record than in February 2023, when the impact of the drought on the economy was not yet fully appreciated, according to the report.