Dollarize or not, a key question from here to October – 26/01/2019

Already at the end of 2018 when the economist Ricardo Arriazu He presented the chart to the leaders of a group of companies that caught the eye and became relevant in the heat of the early political campaign enthusiasm.

The chart in question showed two cards with the political division of Argentina the "Primary result by province" in 2017 and 2018.

At the beginning of the years, there was 13 provinces in deficit and 9 in surplus and a year ago there was a noticeable sign change with 20 provincial states with surpluses in their accounts and only 2 with deficitsThe title could be called the provinces are with the money and the national state had to resort to the Monetary Fund to get dollars.

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Above the Crossing accusations how the government distributes funds to the provinces and the results achieved in terms of the laws pbaded, the question becomes relevant this year of election and is the key in the overtaking provincial elections and the key decision pending that implies that Maria Eugenia Vidal advance the elections (For June?) or he will go on the same ballot as President Mauricio Macri in October.

There are already nine provinces setting a date for advancing governors' elections (Neuquén (10/3), Rio Negro (7/4), Córdoba (12/5), La Pampa (19/5), San Juan (2/6), Between Rios and Chubut (9/6) and San Luis and Santa Fe (16/6) and Tucumán who announced that he was going to move forward but has not yet set the date. AT Buenos Aires the discussion is complete and La Plata, it is said that the theme will be defined in three weeks.

To come back to the fiscal situation of the provinces, it is clear that governors want go out of the national election and in the case of The Peronists, apart prance whether they are going with or not Cristina Kirchner, Sergio Mbada, Juan Manuel Urtubey or Roberto LavagnaIn case they are presented, the concrete aspect is that they have funds to support their luck.

The government has once again specified that, beyond its political aspirations, economic opportunity was bound to respect the agreement of zero deficit with the IMF, it being understood that it is the guarantee of exchange rate stability Argentina lives in these weeks.

The central bank continues to buy dollars and the wholesaler down 4% in the last month, the improvement of the financial climate and help with the recovery of bonds and equities and a moderate reduction in the interest rate.

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The definitions of the last days add importance and consolidate the two faces of the economy: the financial tranquility with market improvement and the data on depth of decline in the level of activity.

The activity decreased by 7.5% in November and a cumulative decline of 2.2% over the 11 months of last year, plus the Minister's forecasts Nicolás Dujovne of Davos that in 2019, the decline will continue.

The government continues its determination not to make optimistic forecasts: the president and vice-president of the Central Bank, Guido Sandleris and Gustavo Cañonero They agreed that "It will take a lot of time" lower inflation as a statement disembodied in technical terms but that it stings the minds of politicians who think about the election campaign.

Rebellious inflation act to achieve a zero budget deficit this year and a path marked by the caution to lower rates interest (the liquidity letters of the Central Bank are at 56.7% per annum) the heart of economic activity of the government which, until now, is walking behind a goal: stay stabilized the foreign exchange market.

Politicians know that the immobile or deferred dollar in inflation tends to give advantage for the authorities but also that during the election years the processes of dollarization of portfolios They are a strong trend.

Official data indicate that last year this dollarization reached $ 27,230 million, the highest figure since 2011 ($ 21,504 million) at the time of Cristina Kirchner.

Inside and outside the government, they project figures on how much private companies could buy this year for precautionary reasons. They conclude that $ 20,000 million (another true enormity) could be a figure "Aguantable" for the government without much excesses.

To this, in Central, they add two ideas: "those who they wanted to buy dollars they've already made and to others the weights will not reach them "The problem is on the table, as is the incredible electoral dance that Argentina will have this year.