The Minister of Economy of Argentina, Nicols Dujovne, travels Monday to determine the conditions for new IMF assistance after a week of insane weightlifting that demonstrated the economic and political vulnerability of the country.
The currency crisis that began in April peaked last week, when the peso recorded a 20% write-down against the dollar in two days for a tame recovery on Friday after a 60% rise in interest rates and centralized sales. Bank, under the expectation of announcements next week.
"Investor confidence in Argentina is still fragile," warns a document from Capital Economics.
In his weekly report, the international consulting firm points out that "there is a serious risk that the government will not come up with a convincing austerity plan" on Monday when Dujovne announcements are awaited for the trip to Washington.
"This would be a clear risk for even more weight loss," he warns.
The currency collapsed after the announcement by President Mauricio Macri on a nationwide network that he had called for an early look at IMF assistance.
The reaction of the markets revealed the extent of the crisis of confidence in the government and its ability to pay the contribution with the possibility of a new recess, quoted by analysts.
Uncertainty frightens Argentinians, in an inflation scenario of almost 20% in July and an accumulated currency deviation of 50% since January.
To calm markets, Macri urged the IMF to "advance all necessary funds" of the $ 50 billion triennial agreement announced in June.
He therefore expects to cover the financial needs of 2019 when his term ends.
After the announcement of the president, the exchange rate went up and the Argentine currencies were sold on Thursday against 41 dollars.
"It was a misstep by Macri," says sociologist Marcos Novaro, who provides for changes in the ministry after financial turmoil.
Argentina has committed to the IMF in June to reduce the deficit to 1.3% by 2019, but the local press speculates on a more stringent adjustment to reduce it to 0.4% next year.
Since the December 2015 power easing, Macri & # 39; s center-right government has drastically reduced public spending with the aim of subsidies, redundancies and freezing of government contracts, along with other fiscal adjustment measures.
But it also benefited from a tax cut for the export of agricultural products, as was the case with the state of emergency.
Tuesday, Dujovne IMF director Christine Lagarde will present, details of the new commitment that Argentina is making in exchange for the acceleration of payments. Since June the country has received $ 15 billion and last week another $ 3 billion.
"But it is not clear if it will be enough to stabilize the finances," says analyst Jim Reid of Deutsche Bank.
The exchange rate crisis brought the risk of the country to almost 800 points, the second largest in the region, behind only Venezuela.
– Exhausted –
Exchange hysteria and its consequences for prices have left the Argentines exhausted, and recall the trauma of the economic crisis of 2001.
Although the financial circumstances are very different, the fear of the Argentinians and the pessimism about the future of the economy is increasing
The CGT, the most important trade union center in the country, called a general strike on 25 September to show a change in the economic direction.
The rise in food prices, transport, basic services and education is exacerbated by the fear of job losses, a fear that affects 50% of employees, according to a study by the Center for Labor and Development Studies (CETyD).