The first steps against the fiscal deficit, reserves and other emergencies

Exports, key to get out of the critical situation / AFP

“You have to stop the ball,” said a former mayor who participated in the assumption of Sergio Massa and with that soccer metaphor he summed up the expectations that the ruling party has in response to the crisis: seeking to anchor those expectations of devaluation and inflationary lack of control via a brake to the monetary contributions of the Central Bank to the Treasury and a strengthening of the Central Bank’s reserves that, drained almost to the end, yesterday fell again by some US$ 150 million.

The minister announced, without further details, a contribution from exporters of grains, fishing and minerals for US$5 billion in the coming weeks. That is to say, in exchange for some incentives -unknown until now except for the “soybean dollar” that had not yet conformed to the field-, a commitment was signed so that they liquidate their holdings in order to increase the coffers of the monetary authority. The early signing of loans with international credit organizations, such as CAF (Development Bank of Latin America), was also brought forward.

Following the path announced by Silvina Batakis during her “transition” administration, she reiterated that during her administration there will be “fiscal order” via a reduction in tariff subsidies and greater control of spending in State agencies. They seemed like gestures to the market to stop the exchange rate run that seemed to revive since Tuesday with the rise in financial and informal dollars. The reimbursement of some $10 billion to the Central would constitute a gestural maneuver in this sense.

A commitment was signed with the field so that they liquidate their holdings

But as economists such as Esteban Domecq observed, although the spending reduction objectives “were as expected,” “few measures and few numbers” were announced on the removal of subsidies, for example. “There is no stabilization plan. Very difficult to order the macro like that”, he pointed out.


Regarding the segmentation of tariffs, there will be a reformulation via an Energy resolution that will try to ensure that those households that requested the continuity of the subsidies – some 9 million, he detailed – will be included in a kind of “rewards and punishments” plan – that instrumented by Julio de Vido in Kirchnerism- with the aim of stimulating savings in water, gas and electricity consumption. Therefore, there were no details on how much money in subsidies the state could save.

Yes, Massa reiterated that he will focus on meeting the goal of 2.5% primary deficit tied with the IMF. In another gesture to the market, he announced a “voluntary” swap for debt in pesos.

Care was taken to minimize the impact on the Treasury of the bond to retirees to mitigate the effects of inflation – the record of more than 7% of the CPI is expected in July -, a mechanism similar to that used by the Government. No differences were observed in the reorganization of the social plans except for the audit carried out by national universities on the 1,200,000 beneficiaries; This review promises to suspend the benefits in case an irregular situation is detected. It is that the “joining” of members of Empower Labor towards formal jobs had already been announced by Minister Juan Zabaleta (Social Development), with relative results, given the resistance of social organizations.

Next Thursday he will meet with businessmen and trade unionists to try to agree on monetary aid for private workers who earn between $50,000 and $150,000. It would be the payment of a fixed sum that is resisted by the CGT, which proposed it to the chief of staff, Juan Manzur, last Tuesday. They argue that these “bonds” flatten the scales of each item and defund the unions for not including contributions, for which they ask to continue with the “free parity” scheme.

Texts of the new minister

“I am not at all, neither a magician nor a savior. I come to work in a very committed way to try to help the country”

“The principles of the program are fiscal order, trade surplus, strengthening of reserves and development with inclusion”

“The only thing that devaluation shocks produce is more poverty and an enormous transfer of resources”

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