the official plan to calm investors

Having no opportunity to negotiate IMF easing under the rigid exchange rate regime, the economic team landed in Washington in an attempt to convince international investors that the official plan will stabilize the currency market and reduce the momentum inflationary.

It will not be easy: officials come in a context of tensions in the debt market, with a level of "country risk" above 800 points, a record for this year.

In the spring meetings of the World Bank and the International Monetary Fund (IMF), the group headed by Nicolás Dujovne (Finance) and Guido Sandleris (Central Bank) has developed a tight schedule to meet investors from the main Des Wall Street banks and representatives of the Trump administration and the IMF.

There will be technical answers to the doubts of financiers, as well as policies. Wall Street releases polls showing the steady deterioration of economic expectations and the fall of Mauricio Macri's image.

Which, until a few weeks ago, seemed to be the most likely scenario – a triumphant Macri in the second round against CFK – is now polled by polls. And it's Jaime Durán Barba himself who has laundered the weekend by ordering polls where the President and Cristina go "side by side".

The electoral scene and the well where the economy collapsed underpinned investment forecasts in Argentina. Prices of debt securities have fallen and the country's risk has exploded.

Measured only by securities maturing in 2021 and 2022, the "country risk" jumped to 1,000 points. A level that yesterday, some banks considered excessive given the economic and financial situation. And this could lead to "casual" shopping.

"We will continue to explain what we have done and to answer doubts, my impression is that there is less hysteria out than here," summarizes a very senior official who participates in the official delegation in dialogue with iProfessionnel.

Beyond the meetings already scheduled in the agenda of the holders of the Treasury and the BCRA, there are conclaves with Argentine officials, organized by investment banks with large funds, during which the second lines from the government will explain their future vision. For example, entities such as JP Morgan and Bank of America already have meetings with part of the economic team.

There is also a special Four Seasons event organized by XP Investments for its clients. Saturday, it will be the Secretary of Finance, Santiago Bausili, to explain the financial program this year and next year (essential element to elucidate the turnover of Letters). In this sense, Jorge Piedrahita, of the Torino Capital fund in New York, recently warned about debt maturities. He stated that their total amount in foreign currency (capital and interest) amounted to US $ 130 billion for the period 2020-2023.

"The reinvestment should be very high and sustainable, and the external context should be positive," he said. Even in this case, he admitted that part of this amount is due to the IMF and the public sector agencies, which reduces the final account. "There will be a vulnerability of Argentina to the mood of the post-2020 market," he predicts.

In the same case where Bausili will express, the central vice president, Gustavo Cañonero, will hold a special panel to explain to investors how the fight against inflation and the "compression" monetary strategy aimed at reducing it. . At JP Morgan, for example, they think that from May (especially from June), the monthly measurement could begin to stabilize around the "2 and the peak".

A "hard" that does not sell dollars

Beyond what the officials propose as subjects to be dealt with, they know that the electoral question and the dollar's fluctuations are essential in their discussions with the market.

"What they ask us the most is the inflation and the exchange rate. And in either case, we will explain what we did. I think the first is more complex than the second. What we have seen in recent days shows that the balance between supply and demand in the foreign exchange market is being balanced, "said a manager close to Sandleris.

Regarding the dollar, they spread in the BCRA a rumor that was woven a few months ago: ask the Fund for greater freedom of intervention. "There will be none of this," they repeat of the entity.

This Thursday is the bilateral meeting between Sandleris and David Lipton, first deputy managing director of the IMF. The American is the one who takes the lead with the issuance of the dollar by the body. As he advanced iProfessionnelLipton did not accept any of the media pressure that part of the government attempted to install in February, when the Fund's mission was in Buenos Aires.

At that time, it was rumored that the executive wanted to ensure greater room for maneuver in the event of a rise in the dollar by electoral noise. Read, to be able to intervene in extreme cases before the exchange rate exceeds the upper band of the non-intervention zone.

The issue has not been formally raised, but Lipton – a former administration official, Clinton and Obama – has dropped his thumb. "It's a" float in series ", as we say in Argentina. In any case, you will not let the funds of the Fund be used to finance the capital flight", commented a former Argentine negotiator in front of the agency very knowledgeable Lipton.

"He was the manager of Citi, where he managed the bank's risk strategy, he had to take losses with Argentina, he will not burn again," he said.

Even the first Deputy Managing Director of the Fund believes that, if the rise in the dollar were to accelerate because of the risk of Cristina Kirchner's return to power, "we must let him go, because they would in any case be taken to the Central Bank, "he admitted. during an interview with the Argentine delegation last year.

Lipton will have his second bilateral meeting with Argentine officials on Saturday when he will receive Dujovne.

Round trip

The government and the financiers know each other by heart. Contacts are usually regulars. But, acknowledge the officials, the summits organized by the agencies are special. They have a particularity: investors behave "en mbade". They empower themselves. Whether for "good vibrations" or "bad vibrations".

The key, they admit, is to be well prepared. A setback can be dangerous, in financial terms. Here is a quick boost for the round trip that, on the hottest topics, is:

1. dollar

• The agreement with the IMF and the harvest guarantee a peace of exchange.
• Central Bank overcomes monetary tightening.
• The interest rate will remain high.
• Banks will transfer this increase to customers' fixed terms. There will be no race.

2. economy

• The rebound in activity has already begun in some areas: land and construction. On this last niche, the data from Ieric are conclusive.
• Inflation will be lower from May.

3. Debt

• Maturities are being refinanced beyond what is fixed with the IMF. This has been demonstrated in the last call for offers of Letes in dollars, which had expired beyond the October elections.
• Something that officials slips themselves privately: "None of the candidates have raised the possibility of a default, this should work in favor, and current bond prices badume a harsh punishment," have they commented.

The data controlled by the investment banks are essential: what is called the "capital flight". The financiers are attentive to the fact that this exit will calm down, now that the foreign exchange market is stabilizing. From this, they will also speak with Argentine civil employees.

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