What are the analysts saying? Week of March 13 to 17

BUENOS AIRES, March 13 (Reuters) – Analysts and traders give their thoughts on Argentina’s economy ahead of the International Monetary Fund’s (IMF) announcement on central bank reserve target (BCRA) negotiations, as a long drought affecting the country’s exports.

The IMF is expected this Monday to formalize a disbursement of $5,200 million after changing the BCRA reserve target for 2023 and raising details to control the budget deficit.

Despite the agreement and a giant debt swap carried out by the government to ease short-term maturities, investors’ doubts have not been lifted in the face of rising inflation, a high budget deficit and few international reserves. , in the midst of a complex year in which will hold presidential elections.

* “Obviously the drought is a very valid justification for adjusting reserve accumulation targets. It’s not a simple thing because the agreement with the Fund is really the only anchor we have and the anchor works as long as it’s believable,” he said. said in statements on the radio Héctor Torres, Argentina’s former representative to the IMF.

“It’s not so easy to say I’m changing the targets and nothing else. We obviously have a fiscal problem. Without fiscal consolidation, we also have an exchange rate adjustment problem which is clear. Changing the goals alone could cast doubt on the anchor’s credibility,” he said.

* “The outcome of the (debt) swap was 57.7% acceptance, below expectations since 50% is state entity participation and there was little private participation,” said Priscila Bruno by Rava Bursatil.

* “The clearance of maturities for the next three and a half months reduces the risk of a spiral. By having to deal with a less demanding profile, the likelihood that the BCRA will have to monetize part of it is mitigated -but not eliminated- from the maturities in case the rollover is truncated,” said GMA Capital Research, while noting that “drought and adverse external winds appear to be derailing carry trade strategies.”

* “Exporters have seized $309 million so far in March (as of Friday 10), representing a 76% decline from the first seven rounds of March 2022,” analyst Salvador Vitelli said, noting that “the average daily liquidation is $44 million, 50% lower than the historical average and 67% lower than 2022”.

* “According to the latest projections, the drought would have a direct impact of 3% of GDP, costing approximately $19,000 million. This will lead to fewer exports and more (foreign exchange) stocks, which will have another negative effect on level of activity and inflation,” recalls Roberto Geretto of Fundcorp.

“The already difficult election year is going to be even more difficult,” he said.

* “The government has given almost everything to pass the year without a financial storm; the main reason is the failure to take into account the need to balance the budgetary accounts and a devaluation due to its inflationary and social consequences”, estimated VatNet Financial Research, and noted that “the budgetary situation is difficult to maintain and that the high and prolonged exchange rate gap has given rise to all sorts of

of distortions”.

* “The end of the La Niña (climate) phenomenon and the resumption of the rains in a few months brings good news thinking of 2024. The new government would face a bid of 20,000 million dollars above 2023, which would provide support the gradual normalization of public accounts and foreign exchange restrictions,” said Delphos Investment.

* “The BCRA continues to lose foreign currency and the supply of the agro-industrial sector is reduced to a minimum. During the week the BCRA had to deal with sales for 282.5 million dollars”, recalled the cabinet Eco Go, noting that “in addition, nervousness and the international situation also did not support financial exchange rates, which jumped around 5.8% during the week, bringing the gap to 96.3%”.

* “When making a monetary policy decision, the BCRA appears to prioritize underlying inflation over general inflation, seeking to isolate any type of impact caused by a seasonal rise, shock transitory or policy decision on regulated prices,” Ecolatina said. .

He added that “if inflation picks up, the current set of economic policy would face a new set of pressures: if the government’s response were to accelerate the rate of devaluation, it would fuel price momentum and the scenario would gain in instability; but, on the other hand, validating a longer exchange delay would make it even more difficult to defend the official parity and would jeopardize the need to accumulate reserves”.

* “Due to restrictions on the import of inputs and the uncertainty of the macro-political situation which threatens investment projects (in industry), it is considered that the current level could be a ceiling, and that the industry would show only marginal progress in the first months of 2023,” said consultancy firm Invecq.

* “Not only the decline in sales hits us because the purchasing power of our customers is reduced, but also the macroeconomic uncertainty that is generated and which hits squarely in the daily life of our companies, we know well that we are not those who form us the prize,” said Alfredo González, president of the Argentine Confederation of Medium Enterprises (CAME), in statements on the radio.

“It’s not that those who form the price are to blame, but the macroeconomic situation and this inflationary process which has unfortunately picked up momentum in the last two months,” he said.

* “The delay of the import system, the tax burden and the foreign exchange market are the three problems that most concern the SMEs that today are part of the productive system of our country”, said Alfredo Bonazzi, president of the Chamber Argentina de la Máquina Herramienta (CARMAHE), and added that “the scenario of constant uncertainty threatens the possibility of making decisions”.

(Reporting by Walter Bianchi and Jorge Otaola; Editing by Eliana Raszewski)