Inflation, reserves and a very cold economy are the new alerts for the second quarter

How to give concrete signs of slowdown in prices? How to preserve the skeleton reserves of the Central Bank? How to prevent the economy from slowing down?

These are the three questions that ring out at each work table of the select small table of the economic team, led by Minister Sergio Massa. With a first quarter already finished, six new increases in April; Reserves, inflation and a shrinking economy are the daily headache of the economic cabinet. On the fifth floor of the Palacio de Hacienda, at least until now, they have failed to show concrete signs of improvement in the economy and they know that between April and July they should have that “good news” when the polls are closer in that time line.

Even with the leniency of the Monetary Fund on the real volume of reserves in the BCRA and the easing of the revisions of the national accounts, the encouragement is highly demanded for the final stretch that leads from the first quarter to the presidential elections.

The international credit organization set its sights on the fourth quarter of 2022 of the program with Argentina, with a relaxation of the accumulation of reserves and the green light for a new disbursement of US$ 5.3 billion.

Prices that don’t stop going up. Photo: NA

The technical staff of the IMF had already evaluated the fulfillment of the goals of last year and indicated that the reserves, fiscal and monetary objectives were met.

The IMF, it is clear, does not want another economic debacle in Argentina, the country to which it lent the most in its entire history. Less in an election year but the inconsistencies of the local economy and the folklore of its politics do not give extra oxygen.

“There was agreement on the importance of the government’s decision to continue advancing with measures that promote the increase in exports with the aim of strengthening reserves,” explained the minister after his meeting with the deputy managing director of the IMF, Gita Gopinath.

Massa, who has just returned from the United States sealing international agreements and getting the green light for a new IMF review, is facing increasingly strong friendly fire.

First was inflation in February, with 6.6%. In a few days it will be March, probably with a floor of 7%.

Prices don’t stop going up and Central’s reserves don’t stop going down. It has accumulated sales of around 3 billion dollars since the beginning of the year; nothing seems to anticipate improvements in the coming months. Even in spite of the new soybean dollar, newly announced and with little liquidation stem according to the producers’ calculation.

The drought hit hard what will come in the next quarter; not only in terms of less foreign currency income, but also in the rebound that the shortage of products and the increase in inputs will have in the prices of basic foods in the gondolas.

The poverty measurement in the second semester 2022, which INDEC released on Thursday, was lethal. Not only because it heated up the internal debate within the Government and reinforced the friendly fire on the economic cabinet; It was a very harsh message for the entire leadership of all spaces.

Yesterday it was learned, for example, that the price of chicken increased in the last month by around 40%, as a consequence of the intense heat wave that took place a few weeks ago throughout the country.

Also in January, salaries began the year with a monthly increase in the last month of 4.7% compared to December, almost two percentage points below inflation in the first month, as reported by INDEC.

However, in the last twelve months, salaries also lost compared to the inflation accumulated in that period, since they rose 92.1%, six percentage points below the 98% rise in retail prices.

The Fund passed the review


The Executive Board of the International Monetary Fund concluded yesterday the fourth review of the expanded agreement within the framework of the Expanded Facility of the Fund (SAF) for Argentina.

The Board’s decision makes possible an immediate disbursement of US$ 5.4 billion, equivalent to 4 billion SDRs.

This puts the total disbursements under the agreement at around US$28.9 billion.

The fine print of the Central Bank’s new reserve accumulation goal is still awaited because it is estimated that around 20 billion dollars will not enter due to the greatest drought in recent years.

The easing of the reserve goal has as a counterpart the Government’s commitment to apply “more solid policies” as requested by the IMF and accelerate the reduction of energy subsidies, especially in the higher-income sectors.

In Economy they hope to get another 3,000 million dollars from international organizations this year to strengthen the arcades of the Central.

You may also like