The government’s “autumn plan”, a mirror of Raúl Alfonsín’s spring plan?

The government declares that it cannot pay the external debt and calls for a price and wage agreement to try to control inflation, while “step on” the exchange rate and the Treasury issues bonds to cover the budget deficit.

Since neither the world nor the country is facing a pandemic, but the basis of the measures taken in August 1988 by the government of Raúl Alfonsín known as the “Primavera Plan” are quite similar to the “Autumn Plan” put into practice by the current government to reach the legislative elections at the end of the year, although with some very marked distinctive features .

the “Autumn plan” facing Minister Martín Guzmán is based on the letter from Vice-President Cristina Kirchner of October 27 of last year, in which he laid the groundwork by discussing the problem of the dollar shortage plaguing the government.

This lack of foreign exchange leads to the public recognition of the Vice President that the Treasury does not have the dollars to pay the International Monetary Fund on 44,000 million US dollars that expire between 2022 and 2023 and no one thought they would get paid. Some of these features could not be refinanced.

The maturity of interest with the IMF reaches 3800 million dollars this year (1900 million dollars in September and the same in December) and could be covered by the quota increase that Argentina would receive for the IMF capital increase intended to finance the attention of the pandemic at the global level.

Assuming, as they do in government, that it is possible to defer the payment of $ 2,400 million Parisian club (It expires in May, but there are 60 days to pay), the ability to keep the exchange rate calm until the election is gaining points.

Alfonsín’s “Primavera” was based on selling the future dollar to stabilize the exchange rate. CFK’s “fall” has it in the stock market, with the fundamental difference that now the Central Bank is buying dollars.

Foreign exchange settlement in March was a record for this month: $ 2.773 million hand in hand with high international grain prices.

With soybeans above US $ 500 a tonne and Guzmán’s promise that the dollar will lag inflation in those months until it hits $ 102.40 at the end of the year, producers and exporters have advanced regulations.

It was good for the Central Bank, which is betting that a weaker soybean crop in United States and a voracious demand for China extend the good entry of foreign currencies from the field until July.

A key will be at the exchange difference (difference between the dollar blue and the wholesaler), which these days has fallen to 55%: the question is whether or not it has hit a floor.

The recovery of four pesos in dollar “counted with settlement” (by selling bonds) the last few days was an indicator that something was moving in the forex market.

Is this the end of the offer of taxpayers who sold dollars to pay wealth tax? It could have played a role, but the market continued to bet on peace.

April has the seasonality in favor In terms of foreign exchange: most of the dollars from soybean exports come in and an important question is what producers will do with the pesos they receive from the sale of grain. Will they be used to buy $ 148 dollars in cash with liquidation?

There is no single answer. Paying a dollar 57% more than the one they sold doesn’t seem like a lot. ¿They will keep the soybeans in the silobolsa, then? It would be a bet that international prices will remain high or that the government will, at some point, have to abandon the policy of delaying the exchange rate for a more accelerated devaluation.

The higher dollar income from the sale of the field, traditional at this time of year, helps the government experience a spring to mid-fall trade, with the clear intention of lbequeath the elections and not much more.

Dollars enter soybean heat at US $ 520 and drop a dropper due to exchange rate, economy rebounds despite government threats to revert to some type of quarantine due to covid-19 and lack of vaccines and foreign exchange the lag contributes to financial stability. The “autumn plan” arrive in spring is operational.

PD: On February 6, 1989, three months after the elections that would give victory to Carlos Menem, the Central Bank had $ 77 million in reserves.

LGP