After several months of negotiation everything indicates that we are in the Bostrimars of the IMF Technical Staff announcement that would seal the agreement with the Argentine authorities waiting for the approval of the Board of Directors of the agency.
The first estimates indicate that this agreement would include a refinancing of payments with the fund itself for the maturities of the next four yearscalculated in $ 14b to be received at the time of each occasion of enforceability and fresh dollars (new indebtedness with this creditor) for $ 12b that would apply to cancel non -transferable letters of the BCRA (Treasury Debt) that given its estimated market price in a 30% of the nominal valuethey could reach to pay $ 40b or more than half of the total amount of these letters than BCRA assets significantly devalue.
It goes without saying that this devaluation generates future inflationary expectations, which is reinforced daily when we listen to the opposition to repeat the mantra that they do not want to owe to IMP Because it forces them to pay while we owe our people to our people, it is easier to liquefy or defaulte: this does not ignore this.
The most important question is what the BCRA With that liquidity a posteriori. It is a very important liquidity stock that can be added another $ 8b that would arrive from the World Bank and IDB.
A mountain of Cash dollars, similar to this, We had in the 3Q of 2024 with the successful laundering which allowed us 210% in 2023to the limit of hyper inflation.
The world is giving us another chance with this phenomenal agreement; And the way to solve the dilemma of What to do with this opportunity is not without temptations.
Considering that this is an electoral year, to make a decision of get out of the stocks It is a risk not less at a time where the Government needs to imperatively increase its parliamentary representation that allows them fiscal and financial deficit sustained non -financing.
In that dilemma, go on the path of security, maintain the stocks and avoid the normal volatility that means accommodating a new exchange scheme arouses restlessness probably more than anything in the economic team that feels responsible for giving the president a macro economy ordered in a year as sensitive as this.
As is often the case in life, avoiding a risk does not imply not incuring another or even, leaving aside opportunities that could have a much greater revenue to the risk size that we want to limit on the conservative path.
Excessive gradualism in disarming exchange restrictions:
- It would avoid some possible inflationary regrowth since it would remain intact the policy of 1% monthly crawling PEG.
- It would slow down the country’s risk to the desirable level of 400 basic points that would allow the government to roll the debt payments of the second semester without using BCRA reserves.
On the contrary “Sensus“, Going for an output scheme more similar to a shock would enable great opportunities, of course, not without some risks:
- It would return to BCRA $ 16-18B of reserves of the famous Blend dollar that are drained today by the CCL market.
- It would encourage the agroindustrial sector to accelerate the liquidation of the thick harvest that is sorry for a very good estimated campaign in approximately $ 30b.
- It would give incentives to the Rigi investors to quickly start the works and bring the dollars for the construction of works that accelerate the production of gas, oil, lithium and mining (another $ 20b?) And with this to give a rhythm to the economic growth that the incipient recovery we saw in the second semester of 2024.
- The exchange unification with a flotation scheme (free or intervened by bands) could involve a few weeks of exchange volatility (to use the same word that President Javier Milei pronounced in his recent discourse against Congress) with respect to which Argentines already have some experience of what that means in terms of prices, wages and social tranquility.
If I were in the shoes of the Minister of Economy Luis Caputo, I would be inclined to the option of gradualism to be able to sleep better and have my lowest and most stable cortisol levels.
But if instead I imagine with the presidential cane in my hand, I would probably put in the balance that the benefits that I can get more risks are enormous and that the local and international perception of the solidity of my economic plan is undisputed after submitting it to the stress of such a radical change in one of the most sensitive items for Argentine society such as exchange policy.
We would end the eternal wandering through the television channels of those who beg a devaluation to perpetuate their privileges and begin a path of growth and stability as we never had before. Yes, I say as never before because all this virtuous circle would occur in an unpublished context of fiscal and financial surplus as sustained as firm.
And the question that President Javier Milei is surely asked at this time is probably: “If I do not do it now with this enormous financial influence as a very successful international policy and an immovable fiscal order, then when?
Economist and former Syngenta CEO
Source: Ambito
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