So much tension accumulated during the election year went hand in hand with the emphasis and strength that the Minister of Economy and candidate put at the service of his campaign to try to lift an economy that had already shown signs of exhaustion in July of last year. The drought that affected the last agricultural campaign affected the exportable balances and dealt the final blow to the Achilles heel of the policy that he had led. Martín Guzmán and Massa himself, dramatically illustrated in the decrease in the Central Bank’s international reserves. A limit that always marked the desire to make a more expansive policy to make the proposal of the official candidate more friendly.
The external flank is, perhaps, the most urgent to address, but it is not the most important. But, clearly, the dollar as the great thermometer of the pulse of the economy will occupy a privileged place starting Tuesday when the markets open in their fullness. The first
The fiscal deficit was hidden during the campaign, except for the theatrical allusion of the now president-elect’s chainsaw. Esteban Domecq, for example, projects 3% of GDP from the operational fiscal red for the end of the year and 5% adding financial services. This has no immediate influence, but it is the variable that ends up fueling two headaches for the last governments: internal debt and the price level.
The effective proselytizing tool of subsidizing public transportation fares, focused on the AMBA where the current ruling party continues to concentrate its electoral power, helped little in this task. The delay in these values and those of energy (fuels, electricity and gas) rather than a deliberate policy was a victim of immobility in the face of the great Argentine historical ogre: inflation. He will also have to face the Government’s deliberate tax desertion during this campaign, especially the effective virtual elimination of the Income Tax for 90% of those who paid it and the tax bonuses for beneficiaries.. A movement that, taken together, would have consumed no less than 2% of GDP but that, ultimately, did not seem to move the needle.
The latest CPI number released last week showed 8.3% for October, one step below the 12.4% and 12.7% of the previous two months, precisely after the devaluation of the official exchange rate of less 22% who were sterilized in less than 40 days. But the worrying thing about this “positive” data is that it was achieved with price control, the Fair Prices program, partial freezing of rates and fuels…. That is to say, the fear that will begin to gain ground from now on is how this minefield can be deactivated without fueling inflation. There is a consensus among economists that it is likely that a recomposition of relative prices will only be possible with an inflationary jump.
But if there will be a promised reform that will come to the fore it will be whether dollarization will be on the economic policy agenda of the next coalition that will govern from December 10 or will it be, as Javier Milei himself already opened the umbrella, a “second generation”, for the simple reason that, although there is desire, fdollars rise in the Central Bank: it cestimates that by mid-November Net reserves were already negative and are projected to be US$-11 billion. But to complicate the monetary outlook, even with a good harvest and with prices that do not continue to fall in the international market, the private sector accumulated commercial debts with parent companies and suppliers for imports this year that are estimated at US$55,000 million.
A panorama not without difficulties but the prudence and clarity of the message to be issued from the first day will ensure that the transition does not undermine the bases of support of the new government. A battle even more difficult than the one that led Javier Milei from the television panels to the Casa Rosada in less than four years.
