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In this regard, the President has already announced that if the initiative is approved, he plans to veto it, while the Chief of Staff, Guillermo Francos, warned this week that “there is no possibility that the Government will be able to cover the expense that this increase represents, because it does not have the resources”.
Another reason would be the lack of definition of a date for the meeting with the Board of Directors International Monetary Fund (IMF) to approve the latest review of the program and, consequently, release a transfer of 800 million dollars.
Lastly, it would also affect the lack of details regarding the renewal of the China swap for nearly 5,000 million dollars that mature in the coming weeks.
Faced with this situation, President Javier Milei transmitted the following message to his Cabinet: “Let’s grit our teeth, we’re going through this storm and it won’t stop us anymore.”according to a high-ranking source from the Casa Rosada Ambit.
Why the dollar rose: Milei’s explanation
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President Javier Milei at Stanford University.
President Javier Milei explained that the rise in the exchange rate It is not due to a supply problem because “We are not issuing to finance the treasury”and neither of demand because currently the monetary base is equivalent to 2.8% of GDP, when the average was 9% to 10%.
Milei maintains that those responsible for the rise of the dollar are “the degenerate prosecutors who are in Congress”, who try to “torpedo the fiscal surplus” in the face of “the perception that, if they succeed, the solvency condition of the State will fall, the Government will fall. And, therefore, the price of bonds falls.”
For the President, “when they see the June numbers and see that the fiscal result is granite and we are not going to deliver the fiscal result, The bond numbers and the exchange rate will automatically be adjusted“, as he anticipated in a speech he gave on Thursday in Santa Fe.
Meanwhile, this week different versions circulated regarding the role of the central bank in the financial market. In this regard, the BCRA confirmed to Ambit that “There was no intervention in the exchange market, nor in the public securities market, as has happened since the first day we assumed leadership of the entity.”
The Government’s favorable numbers
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In addition to the achievements in fiscal matters after May also registered surplusFrom the Government they maintain that the retail inflation went from 25% at the end of last year to around 5% last month.
At the same time, in April industry and construction activity they threw monthly increases of 1.8% and 1.7% respectively. The official interpretation sees it as “a floor” for future increases.
On the other hand, the fixed income sectors had an incipient rrecovery of purchasing power thanks to the joint agreements and the change in the pension formula that the Government applied.
From the Casa Rosada they are positive about the future: “The positive image of the president remains above 50% and the expectation of improvement in the economy is at the highest level in eight years”as published Ambit.
Furthermore, they maintain that “The opposition has realized that it is time to hit us (the Government), because when things improve they will no longer have a chance.”
“For this reason they quickly agreed to increase pensions, with the purpose of damaging public accounts,” they explain in the presidential environment. But they add that “Luckily they are clumsy, and at the same time that they gave half a penalty to the adjustment for retirees, the deputies increased their allowances by 80%.”
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