“The IMF continues to be the great pending task for this new year that has just begun. We started 2022 without an agreement and, again, without details of the macroeconomic plan that was promised for the first time after restructuring private debt in September 2020,” said the consulting firm Portfolio Personal Inversiones (PPI).
Analysts consulted by the central bank (BCRA) increased their inflation estimate for 2022 to 54.8%, about 2.7 percentage points more than previously calculated, according to the monthly REM survey published by the entity.
Bonds and country risks
Argentine bonds suffered losses of up to 8% in the first week of 2022, amid the tension between the Government and the International Monetary Fund (IMF) due to the lack of consensus regarding the fiscal path that Argentina should follow in the coming years . On the contrary, stocks were positive due to the momentum of the financial and energy sectors.
The sovereign securities in dollars that fell the most in the last two days, after Wednesday’s meeting between Martín Guzmán and the governors, were the shortest. The AL29 bonar collapsed 3.3% on Thursday and another 3.6% on Friday. This asset was on the podium of the hardest hit of the week (-6.1%), behind the AL30 bonar (-6.9%) and the global GD35 (-8%).
In this context, Country Risk exceeded 1,800 basis points for the first time since December 1, climbing 0.8% this Friday and reaching 1,802 units.
Portfolio Personal Inversiones pointed out in a report that the weighted average price of global bonds lost almost everything it had recovered in December and “is now only + 5.7% from the post-restructuring lows (verified in November 2021)” .
On Wednesday at Casa Rosada, the Minister of Economy Guzmán revealed that “the fiscal path is the core aspect of the negotiations with the IMF and where until now there is still no agreement.”
From the Government they intend a gradual reduction of the deficit “compatible with the sustainability of the public debt and a redefinition of public spending”, and fundamentally underpinned by the “virtuous” path of economic recovery, to reach a fiscal balance approximately in 2027. Meanwhile, from the multilateral credit organization they intend to cut spending in real terms for the short term.
“The Fund calls for an adjustment policy that the Argentine government is not willing to carry out because it compromises the Argentine people and their ability to grow and develop,” said the presidential spokeswoman, Gabriela Cerruti, at the first press conference of the year. “We hope that it can be resolved as soon as possible (…) Argentina is not going to default,” he added.
The Argentine proposal also raises the need to carry out “a countercyclical fiscal policy to support the ongoing recovery, improve the targeting of the use of State resources, boost capital spending, Education, and Science & Technology, to increase the short-term multipliers and long-term growth and a strengthening of the tax administration that increases progressivity “.
Where there has been an agreement so far with the Fund was on the need to reduce the financing of the deficit with issuance, and to establish various instruments to attack inflation, which include not only lower issuance but also an increase in exports and price agreements to coordinate expectations.
The Government also promised to establish positive real interest rates, a path that seems to have already begun, and to have a real exchange rate consistent with the trade surplus, the accumulation of reserves and the regulation of the financial account.
“It was expected that, given the pressing situation of reserves and the upcoming debt payment commitments, they would act as a catalyst for progress in an agreement with the IMF. The reality is that at the moment there are no signs of an agreement,” he said the consulting firm Delphos Investment.
Source From: Ambito
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