Omen close this week predicts worse economic policy leads only to a deep recession and delusions of key financial indicators.
March 30, 2019
The phrase that the title of this note was the answer he gave the president a question Macro Writer Mario Vargas Llosa, Recalling how he planned the new government should be re-elected. Undoubtedly, this approach, which has been before, but not as precise externalized, Of course, the economic agents, which will accelerate the reach of its project assets.
We said that in the previous column March meant gap with summer lull, In this month closes with the fall of international reserves central bank next to U S $ 1100 million devaluation of higher wholesale change of 10%, and the rate of return of financial instruments issued by the BCRA (LeLiq) of about 67% per year, to which is added the risk of the country once again exceeded 750 points and the projected annual inflation rate of 45%.
If the economic team is outside the three variables that must be controlled to ensure the proper functioning of the economy (prices, the dollar and interest rate), it is macroeconomic policy failure. In this case, we are referring specifically Monetary and fiscal mazazo government appealed within six months, and not only stabilizes the variables mentioned, but has led to the real economy.
With production and consumption and sunk by three key variables to grow unchecked, no one knows how to go for this film. This week central bankHe issued a decree (Communication "A" 6661), which allows banks to to make all of its assets and / or credit potential deposits in pesos, Reaching the highest of the two stops, the letter purchase of liquidity of the governing body. This encourages the financial system in order to accommodate all the available liquidity in LeLiq, so NO pesos that can apply to the Court of dollars.
This decision commits reckless -since the chain of payments of the real sector of the economy and, at the same time, the solvency and liquidity of the banking system It reacts to the failure to recognize the failure of the stabilization plan implemented and try to change it. entirely the interest rate is no longer with the & # 39 is an attractive price that operators keep their surplus in pesos. Thus, we are moving in pushing banks to try to take over the current weight and encapsulated LeLiq purchase. Walking every weight goes Letters liquidity fund.
This decision will accelerate and deepen the recession because virtually dismantles working capital for small and medium-sized enterprises. SMEs have to face the payments within 30 days with charges that occur within 120 days. Lack of pesos on the street hit by brittle match between receipts and payments has the most business unit, with the aggravating circumstance that the policy of monetary absorption BCRA ends displace small loan available private sector. If the financial uncertainty is added to the absence of price horizon, any company will be discussed between the sale of shares, to obtain peso, not knowing what to lose, or to try to fund it without the resources to do it.
IMF has allocated the first $ S 15,000 million disappeared in dismantling "Pump» LEBAC. Now they are trying to use the savings almost U $ S 10,000 million disarm the new "bomb": the LeLiq,
On the part of investors, the fact that all banks apply credit facilities from deposits to purchase LeLiq high interest rates and short throws sur & # 39; serious doubts about possibility of clearing circuits between savings and loans this quantity, The risk of compulsive exchange of letters issued by the BCRA, passing time and lost productivity, increase proportionately macro instabilityOver the next uncertainty for investors.
If the economic team is focused on the stabilization of the variables of the decision to limit the maximum circulation of the peso in the economy is only going to get an answer the gap in the chain of payments and enormous insecurity holders of deposits in pesos.
Dujovne and Sandleris must inform the public what will be the direct result of those decisions and set aside the empty and / or aggressive phrases that are trying to blame others for his leadership failure. The first allocated IMF $ S 15,000 million He disappeared into the disarming "bomb" the central bank accounts (Lebac) LeLiq ancestors of today's tools. now they want use the rescue almost $ S 10 billion to disarm the new financial "pump" that a & # 39 are LeLiq, that poor six months of accumulated stock of $ 1.05 million.
In this fiscal Var & # 39; yatstve They fall U $ S 28.2 billion allocated, who constitute half of the total agreement. Although received unprecedented international support of the IMF and the forces which are determined by the multilateral taking into account the agreed amount equivalent to two and a half times greater than the rate that would meet Argentina in enteric failed to stabilize the economy as a member country.
Policy to curb dollar growth with deep recession, as has been commented on repeated failures with this column. Internal adjustment is not shut down the external imbalance. Just I think that in 1995 during the "Tequila crisis", it was decided to hold the convertible, holding each other at par removing a third of the monetary baseArgentina experienced four quarters of deep recession and open unemployment rose to 18.6%Never go back to single digits until 2006.