Economy minister and ruling coalition presidential candidate Sergio Massa has assured that he will stay leading the portfolio until December 10 after being questioned over his double role as candidate and government official.
“During a storm, I hold on to the rudder,” he said. “The worst thing I could do is leave. I would greatly damage the Argentine economy.”
Speaking during a television interview, the minister pointed out: “We’re bringing stabilisation with the measures we’re taking and we’re going to take, all the difficult measures have already been taken.”
Argentina allowed its currency to weaken by more than 20 percent on official markets last Monday in anticipation of a market backlash to outsider libertarian economist Javier Milei’s upset primary election win.
The peso was trading at 365.50 per US dollar at the Banco Nación state bank by noon, compared to a close of 298.50 before the weekend.
The Central Bank moved to raise interest rates by 21 points to 118 percent to contain deposits in bank accounts and calm turmoil – its third big hike in five months. The monetary authority said the move would help cushion "exchange rate expectations, and minimise the price repercussions."
“The IMF called for 100-percent devaluation. After that they stood their ground with 60-percent devaluation. Ultimately we agreed on 20-percent devaluation. Imagine if 20-percent devaluation generates this uncertainty, what would have happened if we had devalued by 100 percent… What will [opposition candidate Patricia] Bullrich do when she says she will lift currency restrictions, a 100-percent devaluation?” asked the Economy minister.
Moving onto presidential frontrunner Javier Milei, Massa questioned his rival's proposals for Argentina.
“I think when the opposition says they will privatise education, this means it will cost each student three million pesos per year." said the ruling coalition hopeful.
“Health insurance, which both candidates have mentioned, means they will have to pay. They’re telling pensioners to go back to AFJP private pension schemes. I believe there’s a state which has to be more efficient,” he added.
He further stated that there are candidates “using cutbacks of programmes to utter easy sentences which go viral, which sound like magical solutions to those worried about their day-to-day problems.”
“This scenario of thirds, which was unprecedented in Argentina, showed up”, he said.
“Milei is the expression of seven million Argentines who told us majority coalitions that they were angry. And rightly so, the feeling for a number of years has been of frustration and failure," said the minister.
Measures on way
Despite the PASO results and after some days of silence, the government has boosted its support for Massa, who aspires to turn the election around in October and win the presidency.
The Frente Renovador leader is also preparing a battery of economic measures aimed at resolving the crisis caused by the devaluation, inflation and the run on the currency in recent days.
Apart from the provisional price agreements being negotiated by Customs director Guillermo Michel with tax breaks for companies heeding them, Massa is reserving the bulk of his announcements for after his return from Washington, the day after his meeting with the International Monetary Fund (IMF) scheduled for next week.
"We’ll await the return from Washington with the reimbursement in the bag to announce the stiffest measures," revealed a government source with a Casa Rosada office while avoiding further details.
Among the possible measures to face the economic crisis would be a fixed sum (pushed by Kirchnerism) and increases for family benefits and pensions.
After the PASO, Massa explained that "the most difficult measures have already been taken," in reference to raising the official exchange rate to 350 pesos per dollar, promising that "stabilisation would now follow."
"We’re turning the corner to return with greater intensity," a source told Bloomberg last Tuesday to explain the silence of the ruling coalition.
The entourage of President Alberto Fernández, who steered clear of the electoral campaign, assured that there is permanent contact with Massa, denying any early exit from the Ministry. They further revealed that in recent days the president has cancelled his appointments, considering that in the current context of the country "he could not be doing any old activity."
On Thursday the “blue” dollar retreated from its surge earlier this week, falling 20 pesos to 760 after reaching a peak of 795 pesos in midweek, 150 pesos ahead of pre-PASO levels. The gap between official and parallel exchange rates remained in three digits at 115.7 percent.
Peso to devalue 70%?
For the peso, the worst is yet to come, according to Bank of America Corp strategists.
The official exchange rate will weaken to 545 per dollar by the end of this year and then slump to 1,193 by the end of 2024, as the bank’s strategists expect the winner of the country’s presidential elections to further devalue the peso starting in December.
“The FX market will remain under pressure,” said strategists including Sebastian Rondeau, Jane Brauer and David Hauner. “We expect further devaluation ahead.”
They pointed to increasing political uncertainty, pressure on inflation ahead of October’s general elections, the impact of drought on exports and currency reserves in negative territory.