Milei recognized that the surplus cycle is closing and will begin to move into the darkness of the deficit. What to expect from the blue dollar and the IMF.
The official deficit is coming. The question resonates with other variables such as the blue dollar. The Government has just recognized that June will finally arrive in the red in fiscal matters. The reason seems simple: electricity and salaries will have to be paid, both of which are in arrears.
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The statement was made by none other than the President of the Nation, Javier Milei. It was yesterday, in the sequence that represented the message of former president Cristina Fernández at the inauguration of the microstadium in Quilmes -on Saturday- and the president’s response on a radio. While CFK had accused Milei that he could show a surplus because he owed numerous payments, the president responded that, when June arrives, he must cancel the debt with Cammesa to which the state bonuses will be added. “When those numbers come, operationally we are going to be in deficit,” said the presidentalthough he clarified: “With everything accumulated before, the accounts remain balanced, what matters is that the accumulated balance remains balanced.”
With the Bases law under his arm heading to Washington
On the eve of the Deputies’ treatment of the Bases bill, Milei’s sincericide triggered a wave of concern in the Government, especially in the Treasury Palace. With Diana Mondino in China where an effort will have to be made to close the renewal of the swap for just over US$5 billion, the Buddhist eye of Minister Luis Caputo, the third eye perhaps, will be on Kristalina Georgieva. The Messi of finance needs a carom to succeed: the immediate renewal of the swap and, immediately afterwards, the approval of the Bases law in both the Deputies and the Senate. Only then could he, theoretically, pass the cap around Washington again to see if the IMF, sensitized by the supposed political support in Congress, takes pity on the silver wallet. The Government needs dollars and the approval of the Bases seems to be a necessary condition to continue talking about the issue, almost an offering on the altar of the international financial market.
Parallel race: blue dollar, rates and deva
The big underlying question is Whether Milei will be able to put up with the makeup of public accounts for a while longer before Georgieva can reassess how many dollars she can disburse during 2024. Not only the prices of stocks and bonds depend on this decision-making scheme, but also the strength of the exchange rate and alternative prices such as the blue dollar. If the public accounts fall into deficit again, it is likely that the entire house of cards that Milei and Luis Caputo are putting together that promotes a reduction in country risk by dint of an anabolic increase in bonds will be halfway to its objective. final.
More tricks than the magician Chester
Meanwhile, the potholes are covered as best they can. Since the BCRA cannot participate in the tenders, there are tricks that have been put in place. For example, in the secondary market, Santiago Bausili buys the bonds from those who then enter the primary market to buy the tender from the Treasury. Indirectly, the BCRA serves as a counterparty to those who, otherwise, would sell their bonds, causing the price to fall and the rate to rise. There is more. Minister Luis Caputo has just led a meeting days ago at the Treasury Palace where he presented a proposal to cancel only the transactions of December 2023 and January 2024 through the delivery of public securities -BOPREAL- for an approximate amount of 600 million dollars to nominal value.
As was said – and Milei indirectly acknowledged -, This amount exceeds the financial surplus accused by the Government, which reflects the weakness of the positive balance on which the Casa Rosada was flagged. The move is reminiscent of the Treasury bills (Letes) in dollars that the Government of former President Macri delivered in exchange for the pesos, something that the BCRA does today with the Bopreal. Another piece of information that goes in this direction is that the BCRA confirmed yesterday that it is evaluating expanding the BOPREAL so that companies can pay profits and dividends to non-residents, an operation that was restricted by the stocks. Thus, an “exit route” is enabled, the same mechanism that was used for commercial debt, in addition to sucking pesos from the economy.
Does the market believe Milei’s financial surplus? It could be said that, in order not to ruin the business at hand – the appreciation of bonds – many think that everyone “pretends” to believe them. What is the limit? The day there is no choice but to accept the weakness of the accounts. By that time, the Government expects inflation to run at 5% monthly, practically on par with the interest rate and the devaluation that the Central Bank manages to implement. A triple carom.
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