Julio seemed to be a month hinge for the race against clock on which the economic program is immersed. The goal? Reaching the October 26 elections with the perception of an economy in relative peace, that the Argentine collective memory quickly translates it into two variables: the price of the real dollar and inflation. With an IPC oscillating between 1.5% and 2.5% monthly (1.9% showed the last measurement of the INDEC, that of July), with the price of the American currency that is still below the inflation of the year, seems to reach. There are other problems, more gravitants in some cases, but after more than a decade with unleashed prices and an oscillating dollar, that seems to be a necessary ingredient and in some cases sufficient, to validate the march of the plan.
The counter
However, achieving this “calm” as an almost unique objective implies resorting to monetary, fiscal and exchange instruments that have visible side effects. Some will be seen later, but others are already impacting the real economy. The first step was to deflate the demand for dollars, so the promised disarmament of the April exchange rate was limited to the most popular variant but did not cover the entire currency market: the retail segment for both savings and for buying and sale. Its use for the accumulated stock of profits to repatriate, among other paralyzing effects of the control of changes established in 2019 but that was perfected and aggravated as the danger of a run against weight.
The other component to avoid excessive demand for dollars and that its quotation soon touched the ceiling of the exchange band, was that of the non -accumulation of reserves to the extent that it had been agreed with the International Monetary Fund (IMF). This, although it removes freedom of action to intervene in the exchange market, feeds the expectations of its recomposition as soon as the electoral time passes. Not for nothing, the exchange pressure raised the price during July 13% and only the monetary restriction prevented the Central Bank from having to leave early to sell dollars to turn off the fire, with net reserves that continue negative.
The rates flew in two months becoming rapidly positive because the other thermometer, inflation, did not accuse receipt of exchange effervescence. They went from 44% (annual nominal -TNA) to 68% at the end of the previous week, when prices still did not pierce the roof of 2% in June and July. Sebastián Menescaldiassociate director of Eco Go He points out that by August its RPM estimator points to the 2% monthly, a little more than July (1.9%). There are mixed several factors: the impact of the variation in the price of vegetables (the weekly food measurement gave it 0.6%in the second week), The brake of the dollar after the peak last month, the largest commercial opening next to the fall in the demand that compress the margins and, because no, it rises in the interest rate. “It is a very strong monetary squeery that will have a negative impact on the economy trying to contain the dollar and inflation at the same time, but as in the short term, it is feasible that you try to sustain it.”analyze.
Projections
For his part, the chief economist of the IERAL, Jorge Vasconcelos He anticipates that “the monetary squeeze serves to stabilize the economy, but could not be sustained over time without affecting the activity.” In his opinion, Julio’s turbulence left interest rates well above the previous level. For example, for Treasury Bonds (LECAPS), performance above the expected inflation is reaching 24 % annually, against 8 % last March and 13 % between April and June. TOOther, in short -term loans to companies, the rate is about 57% per year, but still lower than the interest applied to personal credits (70%) and a total financial cost that calculates up to 100% per year, due to the distortive tax incidence as gross income and municipal fees.
“If this scenario persists, the slowdown in the activity level will be deepened, there will be more complications for the fulfillment of the credits and will be felt in an increase in the stock of domestic public debt, given that from here to January 2026 the maturities to be refinant equals 12.3 % of the GDP, with a concentration of 8.7 % between August and October”, anticipates. As an alternative solution, it proposes that the key to pass because the political negotiations that introduce rationality in the laws that are treated in Congress and the regime of exchange bands with monetary and exchange policies is more consistent, in order to again “anchor expectations” again.
When in March, with an exchange rate that marched to 1% monthly, the calm returned to the markets with the launch of the April 11 program. With an initial disbursement of US $ 12,000 million from the IMF and the installation Dand exchange intervention bands, The elimination of stocks for natural persons and monetary goals brought greater volatility.
The interest rate doubling the expected inflation is very bad news for the level of private activity, but also for the cost of financing of the domestic debt of the government, YPor therefore hits tax revenues in double way: increases payments of financial services and restricts the tax collection that depends on the level of activity (VAT, II.BB., Fuels).
In turn, Menescaldi points out that all this situation will impact the activity. “Many entities, to achieve liquidity, saw public titles, but are also cutting the financing, via the rate as well as quantities to improve their financial position. “It will cause climb in companies that were very leveraged and with respect to families, delinquency and a credit cutting will continue to grow,”he points out.
Just in case, the Central Bank already warned that the lace (which reduce liquidity and adjust the interest rate) would rise again if in the next tenders the debt refinancing is again less than 100%.
The auditor
The IMF’s periodic reports on the evolution of the Argentine economy are made public and from there the interpretations between the lines are triggered. In its latest monitoring, according to its latest Invecq consultant, the agency expects the evolution of monetary aggregates to be more consistent with the accumulation of net international reserves (RIN) and asks the BCRA, in coordination with the Treasury, which assumes a more active role in the management of liquidity to mitigate excessive volatility, and there is greater clarity in relation to the monetary regime medium term. “It is evident that complicated months are coming in exchange. To the typical pre -election dollarization, greater pressure was added since July and the defaire in the disarmament of Lefi, which brought more noise and added a quota of uncertainty in the face of what is coming ”he explains.
Finally, in this and other analyzes, the gaze returns to the policy chosen by the Government to bet on a favorable electoral result, understanding that this would allow him to fully return to the voluntary international markets of debt and thus obtain the US $ 6.6 billion that they are missing to meet the committed goal of December. A great challenge, even more difficult to overcome than that of the polls.
