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Argentina: Batakis measures, between imprecision and the need for political support

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The measures announced by the new Minister of Economy of Argentina, Silvina Batakis, to achieve fiscal balance and comply with the agreement with the International Monetary Fund (IMF), navigate between imprecision and uncertainty while waiting to see if they will achieve the support of the powerful Kirchner sector of the government, highly critical of adjustment policies.

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This Monday, after completing a week in office, batakis appeared before the press, accompanied by other ministers from the economic area, to communicate her first package of measures, aimed at “give some order and balance to the public finances of the State”, for which he launched a sharp: “We will not spend more than we have”.

Without going into great detail, he announced, among other decisions, a modification of the law so that the entire national public sector makes a “efficient handling” of the budget; a “freezing” personnel in all state agencies; confirmed the segmentation of public service rates for different types of population and ratified that it will move towards positive interest rates.

Argentina today has two fundamental short-term economic problems. One is the fiscal, financial and debt bonds in pesos, which is all exploited. The fiscal deficit for the second semester is going to be stronger than that of the first, and therefore there is a serious financial problem. And the second problem is that of the exchange rate and dollars. The measures announced by the minister were more to solve the first problemsaid the economist Faust Spotorno.

Market reaction

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Some doubts about the future of the economy that do not cease in the midst of the convoluted scenario of high inflation and continuous devaluation and the shortage of dollars that the Central Bank suffers, together with the already entrenched tensions within the ruling party.

The announcements are still being interpreted, especially the prosecutors due to the lack of sufficient details, and also the need to evaluate the political support of the coalition to advance in its implementation.”, he added Gustavo Ber when consulted by the appearance of the minister.

In his daily market analysis, the same economist considered it crucial that a climate of “calmer” For try “address economic imbalances in time” and prevent a new one from being revived “wave of inflationary and financial tensions” that feed back the “vicious circle of mistrust”.

They were very general announcements. We still have to wait for the concrete measures. It will be necessary to see how those announcements are instrumented”, pointed out the consultant Ricardo Progano.

The press conference of batakis it was not received with enthusiasm in the markets: the Buenos Aires Stock Exchange closed on Monday with a fall of 1.33%; the country risk rose 0.70% and the official dollar appreciated 0.75%, while the ‘blue’ dollar, which is accessed on the black market due to restrictions on the purchase of foreign currency in the official market, fell five pesos.

That the markets understand that Argentina is willing to do what the minister said: control public spending, continue on the path of gradually reducing the fiscal deficit so that this does not become an adjustment that harms people”, the president told the press. Albert Fernandez.

Comply with the IMF

Beyond the poor effect on the markets, the measures of batakis they do go along the path agreed with the IMF in the program signed last March, which since then has been the main focus of differences in the government coalition: “It is an agreement that we signed as a State and we have to comply”, settled the minister.

Batakis took office after the resignation of Martin Guzmanone of the ministers most questioned by the vice president and leader of Kirchnerism, Cristina Fernandezwhich criticized him for the adjustment that this agreement entails, signed to refinance the US $ 44,000 million credit granted by the agency when the liberal Mauricio Macri governed (2015-2019).

According to this agreement, the country commits to, among other objectives, achieving a primary deficit of 2.5% of the Gross Domestic Product (GDP) in 2022, 1.9% in 2023 and 0.9% in 2024; and lower inflation -which was 50.9% in 2021-, to a range of 38% to 48% this year, something utopian because only until May the accumulated in 2022 was 29.3%.

For now, none of the main faces of Kirchnerism has spoken out on the Batakis roadmap, unlike the opposition. “Silvina Georgiev”, the deputy wrote on Twitter. Myriam Bregmannof the Left Front, making an ironic mix between the name of the minister and the surname of the managing director of the IMFan organization highly criticized for its formation.

After a week where they marked prices with everything, with more loss of wages and pensions, Batakis’ announcements say that the Government will continue what was agreed with the IMF with more adjustment against the people”, wrote his party partner Nicholas del Cano.

Also, Senator Alfredo Cornejofrom Together for Change, the main opposition coalition, to which macrinoted that the ads were “vague and without precision”.

Nothing was said about the uncontrolled emission (of pesos). If they do not stop issuing they will not be able to control inflation nor will they obtain results in exchange matters”, he concluded.

Source: Gestion

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