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[News] Argentina: Will the patches be enough to reach October 2023 without a crisis?


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Last week, the former Minister of the Economy, Martín Guzmán, recounted in a report how Cristina Kirchner and Máximo Kirchner boycotted the agreement with the IMF. He described Máximo as a capricious boy who asks for impossible things and other details.

These explanations were formulated to explain the problems he had to face during his tenure at the head of the Ministry of Economy.

It is very likely that what he recounted is true, but a prepared person knew in advance what Kirchnerism is. He governed 12 years before so that Guzmán knew what it was about. Didn't Guzmán know that in the previous government there was an Economy Minister who, when asked about inflation in Argentina, said in the middle of a report: "I want to go"?

Didn't Guzmán know that they deliberately distorted the CPI to hide true inflation or that they stopped publishing poverty data so as not to “stigmatize” the poor?

What about Martín Redrado, did Cristina Fernández want to take him away and there was a legal battle for the presidency of the BCRA? Did Martín Guzmán not find out either? And a much longer list of issues can be added that showed the behavior of Kichnerism and of Cristina Fernández in particular, for which accepting the position of Minister of Economy in that government implied getting into a populist mess from which nothing good could come.


For its part, the initial "success" of Massa that was awarded to him by some media, begins to leak with the rise in free dollars: MEP, CCL and blue.

It is that the bet against the dollar rate that kept the market calm for a few months begins to reverse and reveals the inconsistency of the returns in dollars offered by that arbitration, which reached 26% in dollars in 3 months with the dollar standing still and falling. There is no legal activity that yields that rate of return, therefore the model to calm the dollar is inconsistent.

The mistake that some analysts make is to compare the interest rate versus the inflation rate to see if the interest rate is positive or negative in real terms. The comparison is against the evolution of the dollar, which is the reserve currency chosen by the Argentine in the face of the destruction of the national currency.

This inconsistency, together with the uncertainty that is observed on the horizon and the lack of dollars to import inputs to produce, begins to generate doubts in people as to whether there will be a Bonex plan. There are not a few queries that I receive in recent days in this regard.

The reality is that the BCRA has already exceeded the stock of $9.2 billion in Leliq and Net Passes, which were bought by banks with deposits from people. In the event of a financial run that seeks to take refuge in the dollar, the BCRA has only two options: 1) issue to pay the Leliq, generating a hyper and have the banks make the payments over the counter or 2) apply a Bonex plan. That is, give the depositor a bond to be collected in the future. Something similar to what happened on December 28, 1990.

Banks are focused on financing the non-financial public sector. Of the total loans granted by banks, in September of this year, 71% were used to finance the non-financial public sector and only 29% went to finance the private sector. Compared to a year ago, a deterioration is observed.

As of September, the financial system had granted a total of $27 trillion in loans; of that figure, $19.1 trillion were loans to the public sector and only $7.8 trillion were loans to the private sector.


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