The Fund awaits its turn

The specter of an adjustment has hovered over the dialectic in the political discussion since the possibility of an understanding with Argentina’s main creditor and constant monitor of its economic policy, the International Monetary Fund, became a reality.

At times, in the country of the cracks, where everything seems to be sides or tails, homeland or anti-homeland, neoliberalism or populism and as many binaries as labels we want to add to the multiple nuances of economic policy, the reduction to the thesis-antithesis is adjustment yes and fit no. Very easy to understand, but very difficult to explain a reality in which not only the phenomenon of inflation has its “multicausalities”, as Minister Guzmán likes to call it. Without having to read the fine print, the government will not have to pay the IMF anything until it passes the baton to the next administration, be it continuity or rupture with its current policy. The agency’s officials and their own official spokesmen do not make an effort to hide that the agreement approved by their board has a silver bridge so that the solution is kicked for another time. Or rather, that it can be established a feasible and “sustainable” path (another technical delicacy of the ad hoc minister) with other internal and external conditions.

This does not mean that the agreement implies a bed of roses for a coalition that made necessity a right and the extrapolation of growth at Chinese rates of the economy in the four-year period 2003-2007 a permanent roadmap. As a campaign argument it already sounds exhausted, but as the foundation of an economic policy that encourages growth, social inclusion, increased employment and wages, in a sustainable dynamic, it is an increasingly distant utopia. And not because its results are rejected, which could be debatable with Monday’s newspaper (for example, the disproportionate growth of public spending at all three levels and the pension imbalance) but because the initial conditions and the context are totally different.

Internally, support for the agreement in broad strokes was achieved by the support of the opposition even with few fissures, but with the obstruction of the K wing of the “official” coalition. Guessing what could happen with this new political experiment does not offer many guarantees. In addition, the economy, unlike what happened in 2003, starts from strong imbalances evidenced in some worrying indicators. The inflation rate with a floor of 50% per year, despite the more or less direct controls, frozen rates and the tied dollar, is already a mechanism installed so that the fiscal accounts “close” but, in addition to undermining the purchasing power of workers and self-employed workers, definitively alters relative prices, adding the need to correct the distortions produced, with more inflation.

The starting point of the external sector is also different: the trade balance in an excellent year like 2021 showed a surplus of US$ 16 billion and, even so, reserves fell. It does not achieve a result like that, but this year, with imports that will grow due to the explosion in energy prices and a less favorable climate, ingenuity will have to be sharpened to obtain the dollars that are needed. With the economy having recovered almost all of the fall of the fateful 2020 but still far from the previous peaks, more dollars will also be demanded to sustain this rate of growth or the purchase of inputs will have to be rationalized and thus alter the flow of the supply chain. production. As can be seen, another iron dilemma that does not even have the demand for foreign exchange to pay for what could be kicked for later.

Regarding the sudden change in gas and oil prices, a discussion was updated that often goes to extreme numbers but that eludes another feasible solution: the balance point in the accounts of public service companies, with intervened rates politically. Even respecting the position of those who mark its social character in this aspect, there are treaties and accumulated literature to show the costs and benefits of setting prices. But the ambush that the projected scenario of 2022 tended towards the easy “energy for all” is lethal: continuing to depreciate rates below inflation (as has happened since 2018) implies a growing expense because operating costs have gone through the roof and also hit it on the external side with import needs for an empty box.

This poses a major challenge simply not to fall off the cliff, not even to think about a long-term growth plan. Indeed, as the followers of the “popular economy” requested, in the face of these threats, the Fund will have to wait. A new open secret.

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