Everything you need to know about the parallel exchange rate
The depreciation of the parallel exchange rate is taking center stage and is raising questions about what does it mean, whether it is sustainable at these levels and about the implications that it has for inflation, interest rates, growth and imports. More importantly, it also raises questions about what policy measures the government can take […]
The economy after the YPF nationalization: the good, the bad and the ugly
Is the expropriation of YPF a surprise or is part of a pattern? A little bit of both. It is in line with other extemporaneous decisions such as the introduction of the variable export taxes, the nationalization of the pension funds, the use of reserves to pay the debt, and the strict introduction of import […]
Argenzuela?
There have been signs in recent months of a marked deterioration in the business environment, as the Government has been broadening the use of foreign exchange and import controls and has open the possibility of intervening or nationalizing YPF. It all started last October in response to pressures on the peso, at a time when […]
A new look at the deterioration of the external accounts
The external accounts surplus and the resulting accumulation of international reserves have been key pillars of macroeconomic stability in Argentina in recent years. Last year, for the first time in the Kirchner’s era, international reserves fell by around US$ 6 billion, and this reduction took place in spite of roughly US$ 3 billion of external […]
FX Controls: helping reserves but a drag on growth
The government has shown clear signs that it plans to stick to the current policies of widespread controls, as it fully believes that they are effective and that they are working. Eight years of high growth, very strong popular support and a victory by a wide margin in the October elections probably gives the government […]
An assessment of fiscal and financial constraints in provinces
It seems clear that the fiscal situation of the provinces has become tighter in recent years, an issue that has raised questions about the ability to service their debt. This report argues that most provinces are only running small deficits following an election year, and while the fiscal situation is tighter than in previous years, […]
Desperately seeking dollars: is the government overreacting?
The draconian foreign exchange restrictions that the government has been implementing in recent months are raising questions about their motivation, their possible economic implications and the likelihood that they could be intensified in the near future (à la Venezuela). The imposition of the controls indicates that the government has too many objectives and is unwilling […]
New cabinet, old economic recipes, but far from a rose garden
Lorenzino, the new Economic Minister, will be the visible figure of the government and his main role is likely to be in the international side, dealing with the G-20 issues and leading the negotiations with the IMF, the Paris Club and the multilateral Banks. His choice indicates that Cristina wants some continuity over Boudou’s tenure, […]
International reserves: How low can they go?
What can we expect about economic policies and outcomes? Cristina so far has been sending mixed signals. On the positive side there have been announcements about increases in utility rates, the intention to set an 18% cap on wage increases as a way to start dealing with inflation and some friendly messages towards the business […]
One day the exchange rate became a problem
The mood has swung very quickly. One week Cristina was the queen of the pampas after a landslide victory on October 23rd, the next she was a plain Gaucha desperately fighting to restore financial stability and introducing foreign exchange controls and involving the AFIP (our IRS) to stop a run on the currency that deepened […]