Wednesday, November 30

What do economists think of the agreement with the IMF: can it be fulfilled?


José Ignacio Bano, research manager at IOL Inversiónronline

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“The market response to the agreement with the IMF was positive, as we expected, but it was not exuberant. All the indicators were positive and went where they had to go: the dollar fell, bonds and stocks rose, country risk fell. But although it fell, it is high and Argentina continues to be a country with a bad reputation. This is the first step of a journey, until Argentina drops below 1,000 Country Risk points, it is out of the markets. In Argentina, the State needs so much money and has so much capacity to get into debt that it ends up displacing the private sector”.

Claudio Loser, economist and former director of the IMF

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“Normally there is no pre-announcement (…) what there is is an announcement when the technical negotiation has already been completed, but in this case, given that the payment was going to be made and given such tight times, they made this declaration, which is very important because it was discussed in the board of directors of the Fund, which represents 190 countries. I see that (the agreement) could be put together in no more than a month, it may already be well written, surely there is a draft letter of intention, you have to put the numbers and you have to detail many things”.

Gustavo Ber, economist at Estudio Ber

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“Based on the understanding with the IMF, operators will continue to be alert to possible adjustments in ‘crawling-peg’ strategies and to the balances of interventions in reserves, seeking to stop the drainage of recent times. The positive initial reaction was also present between the financial and free dollars, which exhibit a moderate contraction after the upward readjustment as a result of the uncertainty, and thus the ‘gap’ remains very high while the effects of the agreement are analyzed “.

Eduardo Amadeo, economist and former national deputy Together for Change

Edward Amadeo

Edward Amadeo

“This agreement has reduced the fear and the prospect of disaster. Okay, but now we need to see what the fine print says.”

Sergio Chodos, director for the Southern Cone before the IMF

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“In this program you are not going to see a labor reform, a pension reform that affects the majority; yes, policies designed to improve Argentina’s economic and export performance. Until the last minute (of the negotiation) the key was to be able to maintain an increase in spending in real terms every year of the program, that is a core part of protecting the economic recovery and improving it. That guided the discussion of the fiscal path in which the Government was very firm.”

Roberto Geretto, economist at the Fundcorp investment fund

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“Undoubtedly, the principle of understanding between Argentina and the IMF brought some calm to the markets and prevents the precipice in the short term. However, it is very difficult for it to help radically change expectations and provide a shock to confidence.”

Delphos Investment, consultant and adviser in economics and finance

“The announcement of important progress in the agreement with the IMF allowed a recovery of Argentine assets by eliminating the possibility of arrears, which was very present during the week. The agreements on the pace of fiscal consolidation and monetary issue are achievable with greater rate adjustments to what was announced and increased financing in the local and foreign markets”.

Eduardo Hecker, president of the Bank of the Argentine Nation (BNA)

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“The agreement that has been disclosed so far implies a fiscal path in which expenses are not only not adjusted, but grow in real terms, and the way to reach the primary deficit in 2022, of 2.5%, is by way of increasing revenues depending on the level of activity in the economy. The agreement does not imply an adjustment, but rather a fiscal path that is possible and in the best way. It recovers a path of greater stability, reliability. It will make it possible for companies to continue accessing international credit, essential for foreign trade and exports”.

José Luis Espert, economist and national deputy of La Libertad Avanza

Expert Budget

“Say no more that Macri made a bad deal. So you signed a lullaby dear. Who finances the deficit? Guzmán said that it will not be the Central Bank. Then it will be with debt, which you curse every day. And without pro-market reforms?

Gabriel Torres, de Moody’s Investors Service

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“All the details of the agreement have not yet been made public, and this is only the first step in the approval process required for both Argentina and the IMF. The fulfillment of the goals established in the program, in particular The reduction of the fiscal deficit and the monetary financing of the Central Bank will represent a major test of Argentina’s will and capacity to make important adjustments to the current economic policy framework”.

José Urtubey, business leader of the UIA

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“It does not mean an immediate solution to all the problems, but it is possible to begin to move positively, and this is not least at a point where the IMF assumed a self-criticism to some extent and that is why it has this conciliatory position with the interests nationals. If it does not materialize, if there is no legitimation by Congress, not reaching a successful outcome with the Fund would be a negative point, not only because of the lack of possibilities of accessing international financing, but also because a dark road to balance really begins there. the macroeconomy”.

ABECEB Consultant

“We are cautious while waiting for details. The specific contents (fine print) of the Letter of Intent and the agreement with the staff that must be approved by the Board (final agreement) are still missing. There is also a need to manage internal support (from the wing left of the government coalition) so that Congress endorses the agreement. And then, Argentina must comply with the commitments assumed, which will not be without challenges given that the agreement with the IMF is a first step, but it does not solve the macro imbalances or the problems that Argentina brings”.

Miguel Pesce, president of Banco Central

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“Today we are replacing it with Extended Facilities. (The agreement) does not rest exclusively on a price adjustment, a strong devaluation or a strong increase in the interest rate, but rather regulatory mechanisms were used to prevent the balance sheets from generating a macroeconomic problem. We are at a growth floor for this year of the order of 4%, and it is very possible that Argentina will once again surprise with its growth rate this year. Argentina’s growth rate is always surprising, as it was surprising last year, when in September we were expecting growth of the order of 7% and it ended up being 10%.”

Claudio Lozano (economist) and Jonatan Baldiviezo (from the Right to the City Observatory)

CLAUDIO LOZANO

NA

“It implies the assumption of a new debt by Argentina. In other words, a new debt of 44.5 billion dollars will be taken. During the two and a half years, the IMF will disburse this amount that will serve to pay the maturities of the debt taken by the macrismo with the IMF itself in 2018. What is left over will go to strengthen the reserves. In the sum of all of 2022, 24 maturities must be paid for principal, interest and surcharges for a total of US$19,115 million. And in 2023, for another US$19,367 million. After two and a half years, the US$44.5 billion taken by Macri will have almost been paid, but we will be left with a new debt for the same amount with the IMF. There is no information on how the outstanding debt will be paid after two and a half years. The negotiation ends up being just a deferred default and not a solution to the indebtedness. In a few more years, Argentina will have to restructure its debt”.

Ecolatin Consultant

“Although the agreement has not yet been formally signed (there are technical negotiations, bureaucratic steps and ratification in Congress) it is a sign that clearly increases the chances that it will actually materialize during this quarter. One of the objectives of the announcement was to decompress a financial front that was convulsed by the high uncertainty”.

Hernán Lacunza, former Minister of Economy and Finance of Mauricio Macri

Hernán Lacunza

NA

“A crash was avoided, which is always bad, but it’s not that we’re going to be much better. Everything worries me because I see that the government does not put the flight plan on the table. We have the cover of the agreement with the Fund, we avoid default , but the pages are blank. The Government has to present its plan, a program. It would be good if it presented another Budget project”.

Amado Boudou, former Vice President and former Minister of Economy of Cristina de Kirchner

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“It is not a day of joy, it is a day in which there is nothing to celebrate. The damage that Macri and the IMF did to Argentina only took care of him and his friends. National companies, merchants, workers, retirees, and the most vulnerable sectors do not have to pay. I think it is possible to find a mechanism through which they contribute part of what they took. The IMF cannot be paid with the hunger of the people and the development of the homeland And so that this is not just words, I think it is necessary to find a concrete material mechanism so that those who benefited from Macri’s crime pay.”

Diana Mondino, Economist from CEMA University

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“As the poem by Antonio Machado says, turned into a beautiful song by Joan Manuel Serrat, the path is made by walking. The recent understanding with the IMF indicates a possible path along which we would go and it is a very gradual reduction of the fiscal deficit, reaching 2025 with a zero deficit. Likewise, it indicates that the BCRA will gradually stop financing the Government. I would like the president and the minister to sing the complete song and be aware that it is not just one government but all of Argentina that is responsible for these decisions. Having an agreement in principle is extremely important and very positive. We have recently experienced a default and it is something that we Argentines should not commit again. There are still a few weeks to reach an agreement. It is important that we can look ahead, reduce the growth rate of debt, leave our own faults and those of others, and not repeat past mistakes. The poem also says it: When you walk, you make a path and when you look back you see the path that you will never tread again.

Miguel Kiguel, director of the consulting firm EconViews

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“The agreement with the IMF left a feeling of relief. It is a process of many years to reach a country risk of 500 points, to change this current bad reputation. What was not clear from the agreement is the whole external issue: what is going to happen to the reserves. The doubts that exist is, for example, what is going to happen with the rates. There is a contradiction between what the Economy Minister said and what the IMF said: how do you reduce subsidies without raising rates? The Minister of Economy keeps several issues of the fine print under the rug because he knows that when they are known, criticism will come from the toughest sectors of the Government. At a minimum, the agreement is going to call for rates to rise in line with inflation.”



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