Fiscal order, trade surplus, strengthening of reserves and development with inclusion. Under these four premises, Sergio Massa He sat for the first time in the Palacio de Hacienda and began his management as Economy Minister.
At that time, the minister called to “resolve the double face of Argentina, which grows at 6% per year and generates employment, but which has a huge lack of confidence in their currency, spending disorder, public investment gap and enormous injustice in the distribution of income”.
From that moment they passed more than 100 days and the term is not random. It is the period of time that Massa asked to show the first results and then move on to the next instance of managing him. In this context, different analysts consulted by TN They listed the next challenges that the Minister of Economy will face.
Debt in pesos and accumulation of reserves, the concern of Sergio Massa
When Massa took office, he made it clear that the accumulation of reserves would be a fundamental axis within the objectives of his management, something that is in line with compliance with the agreement with the International Monetary Fund. In August, according to specialists, net reserves were around US$1.2 billion and currently amount to US$4 billion, mainly thanks to the so-called “soybean dollar” and disbursements from international organizations such as the Inter-American Development Bank (IDB).
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However, experts warned that reserve levels are still very low. “They are negligible, considering that Argentina imports around US$7 billion per month. The region’s average net reserves are around 20% of GDP. In addition, for the end of the year, net disbursements of US$3000 million remain from the IMF. Although that money would arrive in December, the challenge is how to get there until then, in the current context in which the BCRA sells dollars every day,” he reflected. matias de lucaeconomist of GCL.
“Meeting the reserve target is the most committed. Although the IMF target was lowered from US$5.8 billion to US$5 billion, it is an accumulation goal. This means that the country should have total net reserves of US$7,325 million, while we expect it to reach around US$5,000 million,” he added.
For Ricardo DelgadoPresident of Analytics, at the beginning of his tenure, “Massa ordered the world of pesos through a large swap that took pressure off the maturities of October, November and December, and then began to work with the soybean dollar, which gave the BCRA US $5.1 billion in net reserves when they were barely enough for a week of payment for imports. This led to a situation of maximum distrust”.
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“Now we are in the worst time of the year to generate net dollar flow. What we have been seeing for several days is a net exit that was expected. The last quarter is very dry in terms of dollars. There is no liquidation of the agro-export sector and we are waiting for this complex wheat harvest”, stated Delgado.
Against this background, the drought constitutes a central issue for the future income of foreign exchange. “In exchange matters, this context creates a serious problem. You have to spend the summer because the fine harvest is very bad, especially in wheat. Production is going to be cut in half compared to last year and that will cause a loss of around US$2.5 billion,” stressed Lorenzo Sigaut Gravina, economist at balance.
In this sense, another of the main issues that the head of the Palacio de Hacienda will have to face are the upcoming maturities of the debt in pesos. “It is even more worrying than the situation of the reserves because it is linked to the deficit and we do not know if the Government is going to have the capacity to roll debt next year. Liquidity is a problem, there are many maturities together and political uncertainty,” reflected Martín Rapetti, an economist at Equilibra, in dialogue with TN.
Meet the spending reduction goal
In addition to this, the analysts analyzed the possibility of reaching the fiscal objectives established in the agreement with the Fund, De Luca pointed out: “Until September, the Government accumulated a primary deficit of 1.3% of GDP, so it has room to incur a deficit of 1.2% of GDP in the last three months of the year, without failing the goal”.
“Regarding spending, it should be noted that the government’s floating debt reaches 0.8% of GDP. In other words, the difference between what was spent and what was actually paid is almost one point of the economy. That helps to calculate the deficit, but it will have to be solved at some point, ”he completed.
“The soybean dollar brought exceptional income and that helped to meet the quarterly goal, but the fourth quarter is going to be difficult because inflation is very harsh and the Government had to give bonuses to sectors with low purchasing power,” he emphasized. Sigaut Gravina.
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“Massa is clearly an adjuster in terms of spending. In October, real spending fell 20 points year-on-year. So far in his management, the head of the Palacio de Hacienda adjusted 1 billion pesos in real terms in relation to the August-October period,” said Delgado. And he concluded: “In an emergency it was what had to be done. The Government is in a clear adjustment process, but now comes the most difficult part because the sectors are going to claim and lack of a consistent program and certainty going forward.