The Central had to release more dollars but expects positive data next week. How do analysts interpret the IMF statement?
What did the IMF say ?
To the data of the harvest is added as encouraging data for some (and for others, not very relevant): the fact that the International Monetary Fund (IMF) issued this December 10 a statement on Argentina after concluding technical meetings with local representatives. The document makes it clear that the agreement is still pending, but that work is being done to achieve it , and among the highlighted points are:
- The recognition of a stronger recovery than expected in economic activity and investment this year.
- Which highlights the importance of policies to sustainably sustain the economic recovery and improvements in social and labor conditions.
- It is announced that a general understanding was reached on the need to gradually and sustainably improve public finances .
- They highlight the need to address persistent and high inflation with a multiple approach (reduction of monetary financing of the fiscal deficit, positive real interest rates and coordination of prices and wages).
- Likewise, they focus on generating policies to accumulate international reserves ( promoting foreign direct investment and exports).
- And the importance of developing the domestic capital market .
To better understand the scope of this report, we spoke with several economists about how they read the statement and its relevance to our country.
What do they say in the City of the statement?
For the director of the consulting firm Analytica, Claudio Caprarulo, “ the statement is positive and shows that progress is being made in the negotiations and they are approaching an understanding “. According to their perspective, nothing that is raised in the statement is surprising and is in line with what the Government ordered after the elections: with the decision to stop intervening in financial dollars and accelerate the devaluation a little, they are going into the same line. “Clearly it is a sign of a concrete advance in the negotiations between Argentina and the IMF . This shows that, shortly, two things are going to happen: on the one hand, the long-awaited agreement with its corresponding passage through Congress and, on the other hand, the conditions requested by the body to close, “the economist Federico Glustein responds, in the same sense, to the question of the professional. It ensures that it is key that the necessary conditions are met to agree with the Fund and focuses on the importance of a rise in the interest rate . “If it is carried above inflation, it will reduce the pressure on the dollar for saving / investment, which is good for reserves,” he explains in this regard. In turn, regarding the point at which the IMF highlights the need to reduce the deficit and the emission , Glustein explains that this would allow the local currency to depreciate each time less and generating more confidence to, in this way, take pressure off the dollar. For his part, the Ecolatina analyst Juan Pablo Albornoz considers that, “ the statement is a formalism” and, for him, the presentation of the Budget, with clear goals and with the specification of how they are going To meet the fiscal requirements and how they will be financed, it will be much more crucial than this statement .
It will be key to write good lyrics
However, it highlights that the document in question mentions that, to lower inflation, not only traditional policies (fiscal targets, positive real interest rate) but also a heterodox approach will be considered: price and wage agreements. Thus, he considers that at that point “ the IMF hints at a slightly more open line of thought than on other occasions” . Although it does not rule out that the traditional recipes of the Fund will continue to be and are the ones that will set the course of the economy. For his part, Caprarulo also believes that this document continues to be a statement of good intentions going forward and agrees with Albornoz that there is still an agreement to be reached, but highlights the support that the international community has been receiving in this journey . “In short, is good news, but there is still missing,” he says. Thus, Glustein points out that, with a view to the next few months, the Government must adhere to the commitments it assumed with the Fund and progress in the suggested points and assures that this will be central so that the positive expectations remain and warns that, “otherwise, they could disappear quickly”. As has been seen in recent times, the Government has been outlining efforts to advance in this regard. In fact, an attempt has been made to loosen the exchange rate grip a bit, the crawling-peg acceleration for the dollar was announced and is already partially being implemented, the authorities are repeating ad nauseam the intention to deepen the capital market and it has been worked on reducing the fiscal deficit. However, they are still incipient steps, the experts warn. Everyone hopes that 2022, with the launch of the much-talked about multi-year plan and the agreement with the IMF behind it, the most concrete actions will arrive. Know the value of the dollar in Dollar Today and followed the price and behavior minute by minute. CLICK HERE