With a Little Help from My Friends

The economic scenario is challenging for Argentina: international reserves are scarce, there is an excess of pesos, and an activity level that will fall by 11.6% according to our estimates and 12% if we consider the median of the forecasts in the Central Bank’s monthly survey. The agreement with the IMF is awaited like a sort of Messiah that will help stabilize the economy while the Government debates whether to strengthen restrictions for buying dollars, to split the exchange rate, to fire sell bonds held by the Central Bank, or come up with something else. Something must be done, and the menu should contemplate accelerating the crawling peg and unleashing the interest rate a little. An additional concern is that most of the little data released for August shows that the recovery might have been interrupted. There is not enough information to be conclusive, but this is an amber light.