The Government privately announces that it will lift the restrictions before the middle of the year. Some around Javier Milei are encouraged to predict that the key date will be May or June at the latest, while other economic team officials are more cautious and prefer not to give specific deadlines. Specifically, today there is a question that worries the Government: “When can the stocks be lifted?”
In the corridors of the Casa Rosada they have been claiming for some time that the president wants to dismantle the restrictions on accessing the dollar in the middle of the year and is excited about the idea that the liquidation of the large harvest will boost an income of US$30,000 million, mainly because It will no longer have the drought factor.
Read also: The dollars of the harvest and the improvement of reserves: the factors that the Government looks at to lift the stocks
In addition, Milei hopes to show in the coming months a marked recovery of the Central Bank's reserves and a reduction in inflation rates. This combination of factors, they insist in the Government House, would serve – always according to the official vision – to avoid a sudden devaluation in the short term and completely release the restrictions.
However, these forecasts seem at first glance somewhat optimistic and behind closed doors, the officials who lead the economic team prefer to be more cautious regarding the deadlines, especially because before they can move forward in the elimination of exchange restrictions they have to converge. that series of factors that La Rosada raises, which have not yet materialized.
“When will the stocks be lifted?”: crossed versions on the goal that worries the Government.
”Lifting the restrictions as soon as possible is a priority for everyone, but it is very difficult to predict when the conditions will be there to do so,” said a top official from the economic team, who insisted on not giving precise dates. “Hopefully controls can be opened, but generally there is little that can be alleviated without a small window becoming a gate,” he determined.
The Government's advance to the IMF
In this scenario, last week the report was released in which the commitments that the Executive assumed with the International Monetary Fund (IMF) were reflected, which include the disarmament of exchange restrictions. In that letter, the Government spoke of releasing the stocks in the middle of the year.
The IMF asked the Government to present a roadmap for exiting the stocks towards the end of March and to unify the exchange market for the second half of the year. In particular, he requested that the scheme of liquidating a part of exports at the financial exchange rate be ended and that the PAIS tax be eliminated, which increases the exchange rate paid by consumption in foreign currency and imports.
“The authorities are committed to eliminating multiple currency practices and exchange restrictions, while gradually eliminating capital controls, as conditions permit,” the IMF staff said in the report prepared for the seventh review. of the current program.
In January, Javier Milei met with the managing director of the IMF, Kristalina Georgieva. (Photo: X/@KGeorgieva).
“If the adjustment of just 2% per month of the official exchange rate is sustained, March-April will mark the need to restart the devaluation scheme,” detailed a report from Épyca. The consultant added that by June the Government should also eliminate the differential exchange rate for exporters and a large part of the exchange restrictions.
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“If not, this elimination should be accompanied by a sharp devaluation of both the official dollar and the parallel dollars (with the stocks still in force, the exchange gap will also be maintained). In the interim, even with that 80%/20%, the real appreciation of the official exchange rate and the decline in international grain prices will generate an increasingly greater reluctance to export,” Épyca warned.
The axes of the official projection to lift the stocks and the warnings from analysts
The Government's expectations are based on projections of a good harvest, which will allow the Central Bank to accumulate dollars to relax exchange restrictions. However, the recent heat wave deteriorated the forecasts regarding the dollar contribution that the field could make this year.
“If rain does not appear on the near horizon, the good harvest expected for this year will quickly deteriorate. “It will continue to be better than last season, but it will make difficult the accumulation of international reserves that is needed both to stabilize and dollarize – two of the three paths that we have been pointing out that the Government has open, without it being clear which one it will choose to follow.” stated a report from Épyca Consultores.
The Central Bank will have to accumulate reserves before being able to lift the exchange rate. (Photo: Victoria Gesualdi/Télam).
Regarding the accumulation of reserves, 2024 presents a series of incentives that would encourage official plans: the end of the drought – which would improve exports by about US$20,000 million – and the launch of the Néstor Kirchner gas pipeline, which would improve the energy balance . “However, debt commitments will increase compared to 2023: they begin to amortize restructured bonds (US$3.1 billion) and the step up of interest becomes more acute (US$1.7 billion). Added to this are net payments to the IMF of US$2.3 billion for the remainder of the year,” said the consulting firm LCG.
Read also: The Government releases controls on the financial dollar and facilitates operations for stockbrokers
But also, for Fernando Baer, economist at Quantum, in addition to the recovery of reserves, the Government aims to ensure that there are no surplus pesos when lifting the exchange rate. Thus, there would be no “fuel” to make the exchange rate unification fail.
“They are betting on a strong liquefaction of the peso-remunerated liabilities of the BCRA. That is the main variable that would allow the stocks to be lifted. That is, the effect of inflation with a very negative real interest rate and the absorption of pesos with Bopreal. Work on the supply of pesos so that when the supply of dollars arrives, the situation is controlled,” he explained.
With respect to timing, Baer considered that with the high pace at which inflation has been moving, the Government could reach the middle of the year with the given conditions to remove exchange controls, as it intends. A little more cautious, LCG considered that the Executive should maintain exchange restrictions until at least mid-year. “We see it as likely that the official dollar will correct itself again sooner rather than later and that the BCRA will be forced to maintain controls on the exchange market at least throughout the first half of the year, until it can consolidate the reserve accumulation process. “, they pointed out in the consultancy.
In turn, Martín Kalos, economist at Épyca, warned that lifting the stocks will require validating a cost: either the Government accelerates the pace of devaluation to move away from the 2% anchor that it announced after the December jump; or it validates another strong depreciation of the peso.