What was signed between the government and the International Monetary Fund is a prior agreement. Lack of board approval which is estimated to It will come out without problems in two weeks.
low positive of the agreement is that the IMF understood that the drought changes the expectation of the previously set goals and proceeds to validate new compliance goals.
What about the fiscal deficit?
—A fiscal deficit of 2.0% would be contemplated for the year 2023 of GDP. However, fiscal measures were taken that would add 0.8% to revenue, with which it is presumed that under the conditions prior to this pre-agreement the deficit pointed to 2.8% of GDP.
Is there an increase in tax pressure?
—There is an extraordinary advance of income tax for large companies. And, instead of devaluing the monetary sign, they are applied to the exchange rate that generates a hidden devaluation.
With the endorsement of the IMF, the savings dollar rises and the exchange rate improves for regional economies
—How are the new exchange rates after the new agreement with the IMF?
-He savings dollar has an additional taxfinally, stop those who want to acquire it will have to pay today $ 495 (similar MEP dollar), the dollar card for more than U$S 300 remains at $566, the dollar wholesale is at $270. but the memport of goods would be located at $ 290 for the flight tax, the import of services in $338 and the regional economies will be able to export with a dollar of $340.
—Does this make many products more expensive?
“Of course, the importers will transfer the higher costs to price.
—What products enter the agricultural dollar?
—It does not include soybeans, but incorporate into sunflower, sorghum and corn. What makes the most noise is the incorporation of the cornsince it is the input for adding value in cattle, pigs and poultry, dairy and eggs. There are enabled to export 6 million tons of corn, finally, they could enter close to US$ 1,300 million. However, the government’s expectation is income of US$ 2,000 million, for which more exports could be enabled.
—Would corn with a dollar of $340 have an impact on domestic prices?
—Without a doubt, the expectation will be centered this Monday in the agricultural and livestock market of Cañuelascorn is a basic input for fattening.
Dollar today: pending the agreement with the IMF, the blue touched another historic mark and closed at $528
Impact of the agreement with the IMF on financial dollars
An agreement with the IMF reassures the marketwe won’t see a run into alt dollars, but this may impact future inflation. I believe that the scenario will be between recessionary and inflationary, many prices will rise and consumption will decrease.
—How come the maturities?
—Maturities with the IMF according to data from the fiscal bulletin as of December 31, 2022
- July 2023 – US$ 2.7 billion
- August 2023 – US$ 568 million
- September 2023 – US$ 918 million
- October 2023 – US$ 2,638 million
- November 2023 – US$ 489 million
- December 2023 – US$ 918 million
The IMF maturities would amount to US$ 8,231 million until December 2023. disbursements they will operate in the months of August and November, however, Argentina will have to take charge of paying the due date for the month of July, probably using dollars or yuan. The Central Bank could intervene in the exchange market to contain the rise in alternative dollars.
—The newspapers say that U$S 830 million of interest are due in August
—It is likely that what the newspapers say is correct, what I am presenting is official information as of December 31, 2022. The interest payments that operate in August and November could be higher, but since we do not have official information, we put what we got as of December 31, 2022.
Inflation and votes at stake: the economic dilemma of the pre-candidates before the elections
“Do you see a dollar shoot up?”
I want to be clear. The plan being studied is very recessive and would affect consumption. For the alternative dollars to rise, money is needed, and here we are increasing the tax burden by 0.8% of GDP. I don’t know if we are clear about this part of the agreement.
“What level are the reserves?”
-On Friday closed at US$ 25,205 million a day on Friday. Total monetary liabilities add up to approximately $22 trillion. The reserves would drop to US$22.5 billion with the payment to the IMF. When they receive the disbursement in August, they could exceed approximately US$ 27,000 million.
—We continue in a scenario of great weakness, with a shortage of dollars and an abundance of pesos. We are not out of the recessive scenario, with which there are not many pesos left over for us to see a great rise in the dollar. Consumption is going to show a drop with the appearance of the new taxes.
—The State absorbs pesos?
—The State takes pesos from the private sector from the Treasury through new taxes, and the Central Bank absorbs pesos via placement of letters, this generates illiquidity in the market, which will force you to sell dollars to cover financial commitments. For this reason, we have been saying for a long time that it was important to obtain financing and cover the company’s investment or survival curve until next year.
6 highlights of the week
- IS time to sell corn, sunflower and sorghum with the exchange rate of $340, to proceed to cancel debt or make a fund for the months ahead. Let’s remember that this special dollar lasts until August 31st.
- There is no soy dollar, but we do not rule out that he will return in September. Be careful with this information, do not rush to sell soybeans.
- By making the import dollar and the savings dollar more expensive, more pesos are taken from the market, to meet State obligations, this is very recessive. Consumption will be greatly affected.
- Imported inputs used in the export chain are not increased. The agricultural input would not be affected by the new export taxes, except for the 7.5% increase in freight. The one who bought inputs and financed himself in pesos is winning the market.
- What was signed between the government and the IMF is a pre-agreement, the approval of the board is missing, which is estimated to be released without problems in two weeks. Which we do not know is the amount of disbursements in August and November. In order not to lose more reserves, the disbursement in August should be at a floor of US$ 7,000 million. It is probable that this agreement will not be reviewed until after the presidential elections, the government also has the power to intervene in the exchange market.
- We will have a more recessive scenario due to the higher tax burden, this would allow the government to reach the other shore (December 10, 2023). Each sector of the economy will have to rearm its strategy to be able to finance the flow of funds until the arrival of the next government. It is not easy, the scenario is very complex, for the government, ordinary citizens, companies and consumption will be greatly affected.
* SDS Economic and Business Advisor