From the G20 Summit to the D22 (default on debt in 2022)

But the dreams of an external reactivation clash with the reality of an exhausted economic model. If foreign investments do not happen when the Argentine economy enjoys abundant international funding and an internal reactivation, no sensible person would expect it to happen. they come with a closed credit market and a productive activity sacrificed on the altar of IMF requirements.. Much less when the debt policy agreed with the fund implicitly defaults in 2022 (D22), in the absence of prior restructuring or renegotiation of a new agreement with the fund.

It is difficult for next year's elections, the exchange rate does not resume the pace he knew a few months ago.

The agreement with the IMF provides for the payment of 90% of the funds agreed during the mandate of Mauricio Macri. During the last quarter of 2018, $ 12,672 million was disbursed, of which we must await disbursement of $ 7,260 in December. Until October 2019, the funds invested will rise to 20,592 million US dollars. Then, between October 2019 and 2020, just over 9% of the remaining funds will be invested. And from 2021, the balance will begin to be in deficit, Argentina having to pay depreciation.

The most complex maturity years are 2022 and 2023, where the agreement with the IMF provides for payments of $ 21,183 million and $ 22,294 million, respectively.Given the maturities of other foreign currency debt, maturities for these years are approximately US $ 40,000 million. A scenario that requires the negotiation of a new agreement with the fund and / or a restructuring of the debt, to try to avoid the default.

With this medium-term horizon, the stability of exchange rates recently reached must be understood as a pause in the warming of the income of the IMF's dollars and the high rates in pesos, which favor the temporary realization of the financial cycle (carry trade). But not as a solution to the structural problem of over-indebtedness and structural deficit in dollars. As a corollary of all this, it's hard for next year's elections the exchange rate will not pick up the pace it knew it had a few months ago. Much more when the economic recession will hit the election opportunities of the ruling party.

If this is the case, instead of a $ 4.691 billion decline in reserves for the whole of 2019, as projected by the IMF, they could fall between $ 20 and $ 30 trillion, leaving a level of sufficient reserves. successor between $ 26 and $ 36 billion. In other words, as long as the contagion of the exchange rate to the banking system is avoided, where the exit of fixed terms from the system could have even more serious consequences. Fortunately, the experience of this year's exchange rate has shown that savers are still maintaining confidence in the banking system, with relatively minor deposit withdrawals.

These scenarios are typical of a structural crisis for our insurmountable economy through fiscal adjustments or reductive devaluations. The financial dollar needs of our country do not seem to have a medium-term market solution. The new agreement with the IMF has only temporarily postponed the fatal outcome.

* Director CESO