The history of the comparsa dates back to the 16th century in northern Italy when the Commedia dell’ Arte brought thousands of plays to remote places. The improvisation and spontaneity of dramaturgical productions required the appearance of secondary actors on stage. Thus, surrounded by all his ministers, eight days before taking office, Macri affirmed that his cabinet was “the best team in the last 50 years.” “These are good people,” he assured in the Botanical Garden. There were portrayed for history: Rogelio Frigerio, Patricia Bullrich, Jorge Lemus, Julio Martínez, Germán Garavano, Carolina Stanley, Sergio Bergman, Ricardo Buryaile, Pablo Avelluto, Esteban Bullrich, Francisco Cabrera, Susana Malcorra, Oscar Aguad, Jorge Triaca (h ), Andrés Ibarra, Juan Aranguren and Alfonso Prat-Gay. Because he was traveling, Lino Barañao missed the photo. Nor did Fernando de Andreis, José Cano and Marcos Peña’s two advisers: Gustavo Lopetegui and Mario Quintana attend. The famous key men missed the photo: Federico Sturzenegger, Nicolas Dujovne, Luis “Toto” Caputo and Hernán Lacunza.
The heavy inheritance of that comparsa was increasingly obese, in August 2019. The 2020 financial program was being left on the brink of the abyss. What was clear was that, with the “selective default” imposed by S&P, the government would be able to “kick the cans” of US$6.1 billion plus US$237 billion for the house of Alberto Fernández, everything that expired from September to December. , but the financial obligations to be paid by the next administration would increase by US$5,000 million plus $146,000 million in the first semester of the year, as soon as it took office.
As for the “reestablished stocks” by Macri, it was so precarious and improvised that everything indicated that it would have to be reinforced by Alberto Fernández as soon as he took office. In this context, of political upheaval followed by economic lashes, the level of activity and employment plummeted, while the inflation rate and country risk accelerated. Once again the sad neoliberal history was repeated, “we had fallen from the world, this time with Mauricio Macri”. The heavy inheritance that the next president would take on December 10 would subordinate his mission to his skill, ingenuity and, will of defrauded creditors.
The resounding victory of the opposition on August 11, 2019, aware of those who are dedicated to conducting “serious surveys”, plus the fear that they installed for Cristina Kirchnenstein because of her history of GDP growth, consumption and investment; recovery of energy sovereignty, high participation of workers in national income, plus the fear of a disorderly transition due to financial fragility and the extreme political weakening of the worst government since the return of democracy, dynamited confidence, causing a phenomenal collapse of the demand for Argentine assets.
Alberto Fernández attributed the financing of capital outflows to the IMF and blamed it for the social catastrophe that could break out in Argentina. Consequently, after a fleeting financial-exchange truce to make money with the fictitious pax organized on Friday and the one triggered on Monday, Macrista mistrust was rekindled. The organizers did not miss a single opportunity to earn money.
Due to the decision to default the short-term debt (compulsory and inequitable reprofiling of maturities in pesos and dollars), the rating agency S&P declared the country in a default situation, on Thursday, August 29, 2019, generating a run on the dollar , accelerating the loss of reserves. In this way, the run on bank deposits also intensified and “the stocks on the dollar” arrived again..
The figures of a leak of historical extensions triggered by the anger and/or the plan of Mauricio Macri
Increase in Credit Default Swap-CDS-5 years- (+477%), increase in country risk (+189%), fall of the Merval in dollars (-58%), collapse of the price of BONAR 2024 (-57.6%), sale of BCRA dollars in the MULC (u$s 2,038 million), loss of reserves (-u$s14,160 million), loss of deposits in dollars (-u$s4,746 million), loss of deposits in pesos (- $51,000 million), LELIQ rate increase (+22%, up to 85.7%)
Before the default and the stocks, the BCRA had already lost US$12.3 billion in just 14 business days. That is to say, there were enough people with money who knew that Macri lost the STEP due to beating. The rate of loss of reserves became unsustainable, and the dollars were not enough to attend to all the fronts deteriorating simultaneously. The excess demand for foreign currency was unstoppable, the payment of the short-term debt of the Treasury that was no longer refinanced, plus the loss of deposits in dollars.
The difficulties to refinance the short-term debt were enormous. On August 13, only 5% was renewed with the private sector, on August 28, the tenders for bills in pesos and dollars were declared void. The Treasury faced bills maturing for US$17,000 million until the end of the year: US$9,700 million in dollars and $400,000 million in pesos. And, even if the IMF disbursement had arrived, the Treasury was missing some US$8.5 billion to close the box in 2019 dollars, and just over $400 billion to close the box in pesos, which could only be covered by resorting to the Monetary financing from the BCRA via transfer of profits and advances.
Faced with the disaster described they first opted to default payments of the short-term Treasury debt: Letes in dollars and Lecap in pesos, and immediately the stocks on the dollar became inexorable. With the “prepo” rescheduling of the debtor compulsive and inequitable reprofiling of maturities in pesos and dollars, the will to reschedule the terms of the longest debt with a maturity of up to ten years and with the IMF was announced…
The Macri-Lacunza stocks it reduced the period available to exporters to liquidate their exports, it imposed limits on the purchase of foreign currency, both for companies and individuals, and it established mechanisms that provided for the prior approval of the BCRA to carry out most of the operations that were carried out carried out through the exchange market. The short-term maturities of bills issued by the Treasury to institutional investors would no longer be paid, they sent to Congress a bill for the exchange of medium-term bonds issued under local law, they “invited” foreign banks to renegotiate the debt of medium term to 10 years, they began a negotiation with the IMF to postpone the payment of the debt maturities. They could not pay the debt they had just contracted with the IMF.
In the contingency and the strikeouts, the worst structural decision was made, which would have devastating consequences for many years. It would have been convenient to initially install exchange control, in the first week post PASO, but they still had to keep dispensing dollars left and right. The payment of the Treasury bills was postponed to dates without it being clear how they were going to be paid by the next Government.
Argentina was in a clear political transition -Cambiemos was leaving-, there were no incentives for Congress to support the proposal, there was a lack of a serious fiscal plan to consider any alternative. Without knowing what the next administration’s fiscal program was going to be or knowing if it could pay, bondholders would have less incentive to accept the swap. The possibility that the disbursement of US$5.4 billion from the IMF would not arrive had naturally increased with Macri’s discredit.
The rescheduling of the short-term debt could complicate the placement of Leliq, and the absorption of pesos from the BCRA, before banks where deposits continued to fall. With a monetary program that has collapsed and the IMF program delayed, in the words of Minister Hernán Lacunza, the situation is truly alarming. The “reprofiling” plan did not solve the problem of intertemporal fiscal insolvency due to the Argentine public debt, which represented more than 90% of GDP, they had doubled the indebtedness of when they started. In this context, it seemed that the renegotiation with private creditors could be with important haircuts.
MACRI REMOVED THE STOCKS IN HIS TERM AND RESTORE IT AGAIN
Individuals, from now on, could only buy up to US$10,000 per month without authorization from the BCRA, while other local entities had to request permission regardless of the amount. Non-resident citizens were limited to a purchase of $1,000 per month, but could not transfer those dollars to their countries. Exporters were required to sell foreign exchange proceeds within 5 days of payment and also within 15 days of authorization of shipment for exports of goods. Access to the foreign exchange market for the payment of foreign currency debt to residents was prohibited, and authorization from the BCRA was required for the transfer of dividends abroad. Stockbrokers could not increase their currency holdings relative to the maximum of their August 2019 average positions or their end-of-month statements without BCRA approval. A limit to the global net position in foreign currency of financial institutions was established at US$2.5 billion or 4% of their RPC- “Computable Equity Responsibility” – measure of adjusted equity. For each transaction in the exchange market, the reason for the agreement, compliance with the limits of the established requirements, and a signature of the account holder must be included.
The background of “the stupid opening” -in exchange for nothing-, brought as a result, once again, the macroeconomic vulnerability of Argentina. The destruction of value that we witnessed in those last days of August 2019 would remain as another painful neoliberal record, shaming us in the world economic history books. The level of activity and employment plummeted, while the rate of inflation and country risk accelerated. Gone was the pompous meeting of the Argentine Davos, zero poverty and so many other liesthe world could not understand what had happened to Macri, they only saw that the inheritance that the next president would receive on December 10, 2019, would strongly condition his management.
Director of the Hope Foundation. https://fundacionesperanza.com.ar/ Graduate Professor UBA and Masters in private universities. Master in International Economic Policy, Doctor in Political Science, author of 6 books
Source: Ambito
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