Dollar, IMF, Reservations and Debt: The risks to Javier Milei’s plan, according to Marina Dal Poggetto

Exchange stability has become one of the main bets of the government of Javier Milei, what are you looking for Keep the exchange rate controlled to the October elections. However, Marina Dal Poggetto economistdirector of the consultant Eco Gowarned that this scheme presents serious risks, especially if An agreement with the International Monetary Fund (IMF) is not achieved In the coming months.

According to Dal Poggetto, the lack of net reserves and the growing volume of debt maturities They could become a destabilizing factor that alters the current financial scenario.

Can the government keep the dollar stable to the elections?

President Milei himself has been categorical in his refusal to implement an abrupt devaluation, insisting that Your exchange strategy is sustainable over time. However, Dal Poggetto doubts this statement and warns that the stability of the dollar depends on variables that could change dramatically in the coming months.

“The tour to the October elections will be long and complex if the government intends to maintain the plan as until now,” he explained.

One of the main problems indicated by the economist is the lack of accumulation of dollars in the reserves of the Central Banka situation that began to be noticed since May 2024.

“The scheme stopped accumulating US currency in the current account in May and the market became nervous. As of October, it bought dollars again thanks to the money laundering and the deposits in the financial system increased. There is a reserve that did not receive currencies in a year paying debt in the private sector, ”he said.

While the government has managed to contain inflation and maintain the stability of the dollar thanks to a strong monetary contraction, Lack of reservations and debt maturity in dollars represent a latent threat to the continuity of the economic plan.

The urgency of an agreement with the IMF

Dal Poggetto stressed that, although at the moment the country has the necessary funds to face short -term debt matches, The panorama for 2025 is much more challenging.

“You have the dollars to pay the bulk of the maturities in July, to pay the Breop of the Central Bank. You have to pay the IMF and the agencies, but the reserves are negative and the weights were stagnant, “he warned.

In this context, the economist stressed that The signing of a new agreement with the IMF is crucial to reinforce the credibility of the economic program and avoid tensions in the exchange market.

“The problem is not only to sustain the scheme to the elections, but also to ensure that there is stability later. If an agreement with the IMF is not agreed, the pressure on the dollar could be shot“, held.

The risks of maintaining the current scheme

While the government has insisted that there will be no devaluation jump in the short term, Dal Poggetto warns that The ability to sustain the stable dollar will depend on how the economic and financial context in the coming months evolves.

Some of the factors that could trigger a exchange crisis include:

Lack of currency in reservations: Without accumulation of dollars, the Central Bank becomes vulnerable to any external shock or capital exit.

Increased demand for dollars: If investors lose confidence in the current scheme, they could seek coverage in the American currency, which would press the market.

Difficulties to pay debt: The maturity calendar is adjusted and, without access to external financing, the government could be forced to make steep adjustments.

Changes in the global political and economic scenario: A turn in the monetary policy of the United States or greater risk aversion in emerging markets could impact Argentina’s exchange strategy.

In this sense, Dal Poggetto, in the interview with A24he considered that the government must Find financing mechanisms and strengthen the credibility of the economic plansince sustaining exchange stability only with internal measures could be insufficient.