The Government, headed by the Minister of Economy Sergio Massa, was in charge of making certain decisions regarding the requests made to it by the International Monetary Fund (IMF) in April, where there is mention of the rise in the dollar, rates and rate adjustment.
In this document, the convenience of each of these three moves is mentioned. He does so in the ‘Policy Discussions’ section of the paper posted on the IMF website.
Regarding the interest rate, the Central Bank ended up announcing last Thursday an increase in the monetary policy rate by 10 percentage points, a rate in effective monthly terms of 7.6%, very similar to the inflation of March and of 141.3% in effective annualized terms. In addition, the monetary authority increased the rates of retail fixed terms (up to $30 million) to the same level as Leliq (133.7% annual effective rate).
On the tariff side, from tomorrow the rise in gas will be in force, which is between 20% and 37%, according to what Enargas reported. In turn, according to electricity, from Energía they had announced a reduction in cost subsidies and the increase could reach up to 60%.
Finally (and one of the most important variations) it has to do with the official dollar. On Friday it closed at $229 and on Wednesday it registered the highest daily monthly devaluation rate: 9.6%. Thus, April closed with the highest devaluation rate of the year and in the last week it registered 8.2% monthly, above inflation. It is worth bearing in mind that in January and February the daily monthly variation of the exchange rate was around 5.5%.
Point by point
– Item 11: calls for reducing energy subsidies in general and electricity in particular: “A new resolution will be published in April with the objective that the tariffs for higher-income residential users pay the cost of restoration (85-90 % increase) and a rise of 31% for commercials”.
– Item 19: says that “the Central Bank must be prepared to raise rates if an inflationary shock materializes.”
– Item 20: He speaks of the fact that “an adequate alignment of the devaluation rate is necessary to improve external competitiveness while interventions in parallel dollars should be discontinued given scarce reserves.”
