The measures announced by the Minister of the Economy, Sergio Massa, were initially well received by market analysts, who considered that “they go in the right direction”, while weighing the emphasis on lowering the fiscal deficit, strengthening reserves , the brake on financing via the Central Bank and a plan to clear immediate funding needs with a voluntary debt swap, which would ultimately allow the economic direction to be redirected.
Massa was clear in his official intention to avoid “devaluation shocks”, and instead announced a reserve recomposition plan based on an agreement with the export sector what for liquidate US$5,000 million in the next two monthsin addition to new loans with organizations such as CAF for US$750 million.
In addition, it promised to manage the acceleration of disbursements from other agencies, whose credits are in the pipeline but still need to be approved, and others that had already been approved but were delayed or in the pipeline for US$1.2 billion.
Another point highlighted by analysts is the “Four Repo Offers: To Strengthen Reserves and Repurchase Sovereign Debt”which interested the market, from the point of view that it could raise the price of Argentine debt securities, and therefore automatically lower the country risk.
According to the Economy Minister, three international financial institutions and a sovereign fund have offered themselves in this regard, and it is to be hoped that the announcements will be resolved in the next three weeks as a result of the negotiations in the international tour that Massa will face by Washington and New York, France and Qatar, where the latter country has a sovereign fund of US$ 300,000 million that gives credits and contributes funds to companies and other nations.
These announcements, which are in line for the fulfillment of the goals with the IMF, will allow triggering disbursements to repay the millionaire maturities with the multilateral organization, with which the work meetings already began last Monday, as was officially announced.
With great commitment and responsibility, together with the economic and productive team that I have convened, we began this stage at the head of the Ministry of @Economia_AR.
We have an enormous challenge ahead of us, but also an enormous opportunity to transform the reality in which we live. pic.twitter.com/Q2XJhegf8l– Sergio Massa (@SergioMassa) August 4, 2022
Edmar Bachaa Brazilian economist who instituted the Real Plan of Brazil, considered that “The announced measures go in a good direction, in order to restore confidence in the conduct of Argentina’s economic policy.”
“They remind me of the Immediate Action Program that Fernando Henrique Cardoso announced in June 1993, before the launch of the Real Plan in December of that year,” he said after being summoned by the Austral University to participate in the debate “Economic Stabilization Programs for Argentina “.
While Diana Mondinoeconomist and former general director of Standard & Poors for Latin America, considered that “the announcement that no more transitory advances will be requested from the BCRA and that, in addition, $10,000 million will be returned to it, is positive. Also the announcement that they will unify a large part of the expenses of the decentralized areas of the State. Hopefully I can achieve it,” he said.
Likewise, Mondino considered that “to be effective, the measures have to be aimed at three simultaneous objectives: reduce public spending, promote exports and reduce BCRA liabilities. It is difficult to achieve the three objectives quickly, of course; but -at least- They should be in that direction.
“Short-term measures are by definition a palliative and will be more effective the sooner structural changes can be attempted. It is not fair to the new minister to pretend that there are drastic changes, but it is not desirable that there be delays in implementing them,” he said. the economist
“To be effective, the measures must be aimed at three simultaneous objectives: reduce public spending, promote exports and reduce BCRA liabilities”Diana Mondino
Likewise, Javier Timermanwhich manages funds from local and New York investors, in a conversation with Télam maintained that Massa’s new announcements mean “a very positive change of discourse, he is committed to meeting several goals and seeking consensus with the private sector to accumulate reserves”, explained.
He also highlighted that “the announcements of repos are a possible tool that will not only decompress the lack of dollars but also improve the relationship with Wall Street, the same with the possibility of buying back the debt”, pondered the financial analyst.
As for the next maturities, a voluntary exchange for maturities in pesos of the next 90 days, which will end on Tuesday, August 9, for which there are “adherence commitments of more than 60%,” said Massa, who stressed that “the goal of 2.5% primary deficit established by the national budget”.
In this sense, it transpired that it will be a dual bond swapwhere investors will be able to choose to hedge against the exchange rate or inflation, whichever yield is best for them, according to market conditions, maturing before the 2023 elections.
The new minister emphasized that “no advances from the Treasury will be used for the remainder of the year: on Monday, August 8, a refund of $10,000 million will be made to the Central Bank”, which was well seen by the market in terms of gradually controlling the issuance in order to target a drop in inflation.
Lastly, regarding the anticipated agency disbursementsanalysts took note of the turn in the speech of Mauricio Claver-Carone, head of the IDB, the entity that keeps at least some US$ 500 million for Argentina on hold, after the appointment of Sergio Massa.
I thank Mauricio Claver-Carone for @el_IDBthe meeting held in which we evaluated the status of existing loans and new financing opportunities to promote inclusive development and develop infrastructure works in our country.
– Sergio Massa (@SergioMassa) August 4, 2022
Claver-Carone maintained a hostile position with Argentina and just a week ago that changed: After having indicated last Monday that he still could not “give the go-ahead” to new financing for Argentina, he expressed his support for the appointment of Sergio Massa as Minister of Economy, stating that he will collaborate with the development of the country to resolve the macroeconomic situation.
