Investors beyond Guzmán worried about government direction and forecast further deterioration of the economy

In a context of pessimism, businessmen and executives of the financial sector are worried about the path the government will take after the fight between the toughest Kirchnerism and the Minister of the Economy, Martín Guzmán, beyond of its continuity.

“No one will miss him if he leaves, but we know the alternatives are worse”, indicated at Infobae the owner of a New York investment fund, one of the few interested in the Argentine situation.

“Interest in Argentina is close to zero, but I think if Guzmán leaves the outlook will be worse,” added a senior analyst from another international investment bank.

One of his peers added a nuance: “No one doubts that the situation has worsened and for us the base scenario, which was optimistic for after the election, has become quite watered down. But the fear is that, without Guzmán, the deterioration that we thought was slower would accelerate ”.

“Today the few questions I have from my clients are who they are Paula Spanish Yes Augusto Costa, whom they see as possible replacements for Guzmán. In any case, the fear is of a growing interventionism on prices and even on the price index, even if this would shoot itself in the foot because of the amount of debt linked to the CER ”, explained the leader. of the important bank, surprised by the statements of the governor Axel Kicillof against the minister.

In this sense, he considers that the damage has already been done: “If Guzmán stays, it will be at the cost of great weakness; he can no longer guarantee anything. And, if he leaves, the question is the way to follow in the medium term, because it is possible that the chance of an agreement with the IMF is even more remote ”.

These sources were concerned to clarify that they do not highlight any achievement of Guzmán, because although the swap to exit the default was successfully closed, this operation failed to restore confidence and they do not observe no other milestones in its management to stabilize the economy. .

In this sense, they believe that the government could default with the Paris Club, pay the IMF this year with the additional resources provided by the agency for $ 4.3 billion and wait to see what happens with them. heavy payments of 2022, impossible to cope without a new program.

In this regard, from Washington, the former IMF director for the region, Claudio Loser, He said: “If Guzmán leaves, the best mechanism or bridge of communication and understanding with the IMF will be broken; I think the IMF will be very worried, even if it does not express it openly ”.

If Guzmán leaves, the best mechanism or bridge for communication and understanding with the IMF will be broken; I think the IMF is going to be very worried, even if it does not express it openly (Claudio Loser)

Benjamin Gedan, deputy project director for Latin America at the Wilson Center, said that “Guzmán is seen abroad as a pragmatic person who recognizes that heterodox policies in Argentina, such as capital controls, price controls and the budget deficit, are obstacles to long-term sustainable growth.”

“He showed that he was a good negotiator when he reached an agreement with foreign creditors last August and that there are sectors of the government which have a more ideological view of the management of the economy,” and some who may prefer to fight with international finance. instead of negotiating with the IMF or attracting foreign investment. For this reason, Argentina’s post-pandemic economic recovery depends in part on which faction wins in this internal dispute, ”he said.

Another former Fund official who knows Argentina well said: “Everything that comes in the realm of economic policy looks like more restrictions, no matter how the government does in electoral matters, because Cristina Kirchner has always shown that she prefers to repeat rather than correct.”

For this reason, the source indicated that the prospect of an agreement “appears more and more distant, because Argentina does not have a debt problem, but rather credibility and uncertainty because it is not known. what the government wants “.

For its part, Gabriel Lopetegui, The former director of Argentina before the IMF, said that “in Buenos Aires, they should understand that if they signed a treaty of facilities extended to 10 years, for four years, they would stop paying and, after this period, they would begin to do so. in installments. It would be a great oxygen until the country can return to the voluntary capital market in a few years, ”he said.

“In an extended installation agreement like the one Guzmán wants to sign, each disbursement is returned in 12 semi-annual installments, the first of which expires 4.5 years after the respective disbursement. For this reason, the idea of ​​a 20-year agreement, as some members of the Argentine government want, is totally useless ”, Explain.

One of his peers added anonymously that “Guzmán’s relationship with IMF staff is clearly very good, but The last thing the Fund prefers is to keep talking with a minister whose power has been liquefied; there are no irreplaceable people ”.

From Washington, another source added that the government should not be concerned only with the Paris Club or the directors of the western countries at the IMF, because the hope that China or Russia will receive more benign treatment is a “fantasy” in terms of collection or collection of receivables. investments, as evidenced by Guzmán’s European tour, where from Berlin to Moscow, the Minister received the same message: companies and governments want respect for legal certainty and the possibility of invoicing their contribution.

In this regard, it was recalled that the G20 countries have agreed on a common processing framework to collect their sovereign debts, whether or not they participate in the Paris Club (China and Russia are from the G20 , but not from the Club).

As explained on the IMF website, “the framework is designed to ensure broad participation of creditors with equitable burden sharing. It is important to note that it includes not only the members of the Paris Club, but also the official bilateral creditors of the G20, such as China, India, Turkey or Saudi Arabia, which are not members of the Club. from Paris “.

And immediately clarifies: “To benefit from debt treatment under the Common Framework, a country must have an IMF-supported program to support the implementation of appropriate economic policies and structural reforms.”, reflecting that the rules are the rules, in the West and in the East, regardless of who is in charge of the Palacio de Hacienda de la Argentina.

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