Silvina Batakis faced the first test in the markets on Tuesday after being sworn in as the new Minister of Economy of Argentinaa position from which he will have to deal with a complex scenario of macroeconomic imbalances further agitated by political divisions in the ruling coalition.
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Batakis, an economist with a heterodox profile, was sworn in as the new minister and gave her first definitions on Monday afternoonafter the closing of the markets, which had already reacted very negatively to the resignation of Martín Guzmán as Minister of Economy.
Already with Batakis in command of the complex Argentine economy, the S&P Merval index of the leading shares of the Buenos Aires Stock Exchange recovered 2.91%, while the price of the US dollar in the informal market fell to 252 pesos per unit , after having shot up the day before at 260 pesos.
However, in New York, which did not operate this Monday due to being a holiday in the United States, Argentine stocks recorded falls of 5%, while Argentine sovereign bonds sank 10%, with a country risk index at 2,587 basic points, a level not seen since June 2020, when Argentina had not yet managed to restructure its debt.
A landscape of uncertainty
Batakis is not only challenged to calm nerves in the markets. The deteriorating expectations are also affecting the behavior of companies and citizens, increasingly burdened by multiple macroeconomic imbalances.
Probably, we are facing a context of greater permeability for a higher level of inflationary inertia and price markings given the uncertainty
After the jump of almost 10% in the prices of the dollar in the informal and financial market -a phenomenon that in Argentina quickly translates into more inflation-, this Tuesday the scenes of merchants remarking prices or, simply, without available values were repeated for their products, waiting for strong increases from their suppliers.
In fact, the first business day was marked by suspensions of operations and, at the retail level, there were no prices of goods and dollars,” said Martín Calveira, a researcher at the IAE Business School, business school of the Austral University.
challenging scenario
In her first definitions as minister, Batakis has ratified the continuity of the economic program of the Government of Alberto Fernándezwhose lines and goals were reflected in the refinancing agreement sealed last March with the International Monetary Fund (IMF) and which has been questioned by Kirchnerist sectors that respond to the vice president, Cristina Fernández.
Among other aspects, Batakis spoke in favor of seeking fiscal balance, one of the goals of the IMF agreement and a point questioned by the vice president, whose open criticism of the progressive fiscal adjustment undertaken by Guzmán led to her resignation from office last Saturday, in the midst of a growing confrontation between Cristina Fernández and the head of state.
All in all, Batakis, who hopes to establish a first contact with the IMF this Tuesday, pointed out that the fiscal and monetary quarterly goals agreed upon with the agency, already corrected in the Fund’s last review, could be changed again.
“At each revision of these quarterly goals, surely also there will be some modifications because the world is continuously changing for the war,” Batakis said in a radio interview on Tuesday.
In addition to working to meet the demanding goals agreed with the IMF, Batakis will have to find a way to tame Argentina’s high inflation, which accelerated to 60.7% year-on-year last May, undermining the purchasing power of Argentines, something more than a third of them below the poverty line.
Without sufficient foreign exchange, without access to international financing, with altered markets, import restrictions that threaten production, high labor informality, rising inflation, increasingly weak economic growth, a global scenario that does not help and an internal policy that tenses Even more the panorama, the task that Batakis has ahead is not less.
Moody’s risk rating agency warned on Tuesday that Batakis “will have to face serious macroeconomic and credit problems in an increasingly complicated political context in the country.”
“The high levels of inflation, the fall in international reserves, the increase in the debt in pesos and the need to reduce the fiscal deficit to meet the objectives agreed with the IMF represent great challenges that the new minister will have to face,” he said. Moody’s principal analyst for Argentina, Gabriel Torres.
EFE
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