The first announcements of economic policy changes are Argentina not convince.
The super minister for the economy, Sergio Massa, who took office on August 3pledged to reduce the government gap, zero currency problems and boost foreign exchange reserves, for which an increase in credit for exports would compete.
But, as the former Minister of Production and Labor notes Dante Sica, who has returned to run consulting firm Abeceb, there is no way of knowing how these adaptation goals will be met. These are suggestions that do not shy away from firmness.
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Last Thursday the Central Bank of the Argentine Republic (BCRA) reduced the base interest rate from 60% to 69.5% per yearto combat inflation that will rise to 93% by the end of 2022.
As a result of inconsistent and isolated economic policies taken during the presidential tenure Alberto Fernandez, but political uncertainties have also been increasing for a long time. The public accounts gap, which accounts for 1.8% of GDP, and the balance of payments gap (twin deficits) lost coverage due to the lack of external credit and reserves, which were $10 billion in 2013 and on 2 $.3 billion declined. What remains are currency issues that bring more inflation into play.
THE Policies aimed at putting out political fires with subsidies and the indefinite shifting of solutions created a huge misalignment between relative prices. For example, in the two years and seven months to July, French bread prices rose 236.3% while electricity tariffs corrected only 56.3%.
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Despite the regret, the projections are for the Gross domestic product (GDP) In 2022 it was 2.7% (in 2021 it was 10.3%). But the prospects for 2023 have plummeted.
The loss of confidence of external creditors is best illustrated by the jump in the trajectory of Argentina risk, the “insurance” charged on bond interest rates falling on 9 interest) This level denotes an imminent risk of default (default).
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The rush for the blue dollar (parallel exchange) rose from 208 pesos per dollar at the end of 2021 to 292 pesos per dollar on Wednesday, a 40.3% increase in 2022.
Dante Sica states that there are no political conditions for an orthodox stabilization plan. Either Sergio Massa will attempt a partial correction, using his political trump cards, or the adjustment will be disrupted, which could lead to hyperinflation and recession a situation that would have unpredictable political developments today.
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