The day after primary elections (PASO) 2021 that implied a resounding defeat for the Government, will have its first reactions in the markets, which is discounted will be bullish. There may even be an escalation, which is already anticipated by the so-called pre-market operations with Argentine shares that are listed in New York with rises of more than 20%.
The operators had been positioning themselves strongly in anticipation of a defeat of the ruling party in the first electoral test in a pandemic, but the broader than expected result intensifies the worries preexisting on what will come in the next 60 days, until November 14 when the turn of the general elections arrives.
This is because analysts discount that the defeat will lead the Government to redouble the strategy of “putting money in the pockets” of voters to improve social humor, which will generate more monetary issuance that, in the long run, will put pressure on the dollar and the inflation.
As reported TN.com.ar, the Casa Rosada already had in a folder several tools to launch just after the STEP. Now, with the 10 points of advantage that the opposition took from him at the national level, a second round of fiscal impulse measures is now expected “that they would be more generous than expected, with its consequent impact on financing needs via monetary issuance, among other things, “he explained Lorena Giorgio, chief economist of the consultancy Balances.
For Ricardo Delgado, director of Analytica Consultant, the adjustment that was made in the first seven months gives the Government scope to reinforce the push electoral, the tax injection to the wage bill, in its bid towards the November elections,
Dumping more pesos on the street, meanwhile, will reinforce the devaluation pressures against the local currency, overheating the blue dollar and the financial ones. La Rosada will seek to avoid any abrupt jump of the dollar, even at the cost of continuing to lose reserves from the Central Bank (BCRA). In that sense, if the pressure is very sustained, the monetary authority can further strengthen the exchange rate hold, after the tourniquet on financial dollars that has been in force for a month.
Delgado considers that access to dollars is already very limited, but that the Central still has room to continue hardening it, should it need it and even though economic activity slows down. “The future dollar is at zero, it can limit access to the exchange market for importers, although that implies less economic rebound because the importation of inputs is key to that. It is not desirable, but it can fine-tune the instruments so that the shortage of dollars is less noticeable, “said the economist in dialogue with TN.com.ar.
What measures will the Government take and what does Martín Guzmán foresee?
As with every election that is lost, a government – whatever its sign – tries to recover and bet on changing the situation in the next election. 60 days after that challenge, the Government reaffirmed the course and stressed that it will seek to “consolidate the recovery of the economy, which is already being felt, although in a heterogeneous way,” said the Chief of Staff on Monday, Santiago Cafiero.
With no changes in the economy in sight, the expectation of some political gesture grows: a change of names in the cabinet national that serves to “oxygenate” and arrive better prepared to the final choice. Among entrepreneurs, analysts and operators, Cafiero and the Minister of Economy, Martin Guzman, they appear as “put numbers”.
The chief of ministers, however, dismissed those rumors and reaffirmed that it will be the Economic recovery the task ahead by interpreting that that is the unsatisfied demand to which the president referred Alberto Fernandez in his speech after the defeat.
“It is with Martín clearly. Today it is not in discussion that there are changes of names. Of course, the President always has his choice to select his collaborators ”. Cafiero replied to FM Urbanaplay when he was asked about the continuity of the minister.
For now, at the Palacio de Hacienda they are concentrating at this time on three key events that will be known in the coming days. On the one hand, this Tuesday the Indec will release the official inflation data for August, which Guzmán advanced will be by below 3% and that, the Government hopes, will mark the second month of deceleration in prices.
Meanwhile, the details of the 2022 Budget project, which will enter Congress that day, are expected to be known by Wednesday 15. In this initiative, in which the Casa Rosada will reformulate the 2021 expectations of inflation (from the original 29%) and the economy growing that recalculated it in 8%. The most important macroeconomic variables for next year will also be known: prices, GDP, fiscal deficit, tariffs, dollar and the price of soybeans, among other parameters.
The other milestone will be the next Wednesday 22, when Argentina must pay the first maturity capital to the International Monetary Fund (IMF) for about US$2000 millones. The commitment will be canceled with reservations after the transfer of the “pandemic funds” made by the body itself on August 22. At least that is what they assured in the Government before the STEP.
Paying the quota to the IMF, for the loan of more than US $ 45,000 million, is one of the conditions to move towards a new program with the body led by Kristalina Georgieva, in which the Government seeks to extend the terms beyond what is allowed the Fund’s own regulations, at the same time that the surcharges charged by the entity are eliminated.