Nicolás Dujovne will seek to bring the peace of mind to investors in New York

After the teleconference in Buenos Aires, the face-to-face arrives. In the coming hours, Minister of Finance and Finance Nicolás Dujovne will hold the first round of meetings with investors in New York, to whom will explain the steps of the national government in economic matters which includes two main elements: who are intertwined: how will the agreement with the International Monetary Fund be filled and the political negotiation to approve the 2019 budget in Congress.

According to Hacienda sources confirmed at TN.com.ar the first meetings will be held this Sunday, while tomorrow will close the tour with another series of meetings with major investment funds. from Wall Street. The feast of Monday, in which there will be no activity on the foreign exchange market, will give the possibility of extending for a few days some "tranquility" with the dollar that Casa Rosada got last week . new battery of measures: increased reserves to banks, so that there are fewer outstanding pesos and the offer of a letter in dollars with an attractive rate.

Last week, Dujovne maintained his first contact with major investors since the return of the Treasury's finance portfolio. Previously, this type of conference was headed by the current president of the Central Bank, Luis Caputo. In this first contact, the minister explained to some of the "big players" in New York how the next steps of the government will be.

The presentation that Dujovne showed was entitled "Argentina after agreement with the IMF". In this one, he pointed out, first, that the "convergence" towards a balanced budget, ie the elimination of the deficit, would be "faster" and would advance to the end. in 2020 while before the agreement with the IMF (and before the "financial turmoil"), this target was set for 2021.

In addition, the presentation makes explicit the dollar requirements of the IMF. government for next year. Despite the $ 50 billion pact with the International Financial Agency the government told investors that it would need about $ 8 billion which "should be realized on the internal market ". Therefore, the Treasury plan does not include taking out debt abroad.

Other points that the minister presented to investors include the debt payment roadmap for the next ten years. The most "loaded" will be next year, 2020 and 2026.

The government could start checking the reaction of the markets only on Tuesday. Last week, it managed to control the price of the US currency after several weeks, mainly by applying new limits to the lending capacity of banks, so that fewer pesos "circulate" and reduce the pressure on the bank. dollar. On Thursday, it also offered the first exchangeable Letes for central bank notes, although the result was seen as "insufficient" by the market, the government saw it as something positive.

Some 8,100 million Lebac pesos were exchanged for this bond in the short term (a little over a year and will pay a rate of 5.50%), out of nearly 550,000 million Central pesos they win on July 18th. That day, the market will fight with the government to get better interest rates in pesos in exchange for a stay in Lebac, or that a "weak" renewal of these securities will result in a increase in demand vis-à-vis the dollar.

Doubts about the agreement with the IMF

Investors still have doubts about how the national government will do to achieve certain goals established in the agreement with the IMF. One of them is the path of disinflation. The financial program with the international organization implies a target of maximum inflation for this year of 32% .

For some private consultants, in the current state, projected inflation by the end of the year will be close to 30% just below the limit tolerated by the agreement. According to a report by Ecolatina, "if new dollar hikes do not materialize in the rest of the year, inflation would be around 13% in the second half of the year" and as a result "would accumulate 30% by December 2018, above the target (27%) was in agreement with the IMF and just below the maximum level (32%). "

The report says that there is reason to believe that until the end of the year there are other reasons. Inflationary pressures will remain dormant in the second half of the year : not yet all the transfer to the prices of the recent currency depreciation was recorded, and also, sooner or later, a readjustment of relative prices: the reopening of paritarias and the claims of energy companies to recompose the rise in costs produced by the dollar jump, account for inflationary pressures will persist even if the lull of exchange lasts [1] 9459004] ". [19659002] The consultant risks even since the goal of next year will also be compromised . "The ambitious target of reducing the primary deficit in 2019 will push for further rate adjustments , and the electoral need to rebuild the decline in real wages suffered this year will drive up the cost of labor, so it is likely that next year the inflation of the maximum level agreed with the IMF (21%), "he concluded.