Economy Minister Sergio Massa has long been nicknamed “ventajita,” a word perhaps best translated into English as “petty advantage” – recent developments would seem to be giving a new twist to this word since his advantages now look not so much petty as short-lived. If that portion of the year 2022 which Massa was called upon to cover generally smiled on the super-minister as he raked in his patented invention of “soy dollars” for Central Bank reserves, edged inflation down a notch and kept the International Monetary Fund at bay, this year of 2023 has thus far brought in little other than bad news while taking a distinct turn for the worse in recent days.
When January inflation clocked in at six percent on Saint Valentine’s Day (a date of massacre as well as romance), this editorial space recalled the Book of the Apocalypse’s identification of 666 as the “number of the beast,” linking this to the six-year prison sentence for corruption handed out to Vice-President Cristina Fernández de Kirchner in the preceding month of December and concluding by asking when would the apocalyptic number of six strike again to complete 666 after surfacing on both the economic and judicial fronts. The answer to that question came last Tuesday when INDEC announced February inflation to be 6.6 percent, thus repeating that beastly number as if to underline the point.
In an interview published in the January 14 edition of this newspaper, Massa had boldly forecast that the month of April now only a fortnight away would see an inflation of “three-point-something” – that level now being doubled in the shortest month of the year with annual inflation moving into three digits makes the super-minister’s ‘guestimate’ look like a ludicrous outburst of wishful thinking. But February inflation was far from being his only setback in a week commencing with a global run on banks starting on the Pacific coast (Silicon Valley Bank) to cross the Atlantic (Credit Suisse) – moreover the lumbar hernia conveniently side-lining President Alberto Fernández on the day the disastrous inflation figures emerged leaves Massa holding that baby and all the others with neither half of the Frente de Todos presidential ticket in circulation, an accumulation of political power and responsibility in inverse proportion to his chances of clinching this year’s presidential candidacy, given such an adverse context.
Inflation has started this year on an upward curve in its first two months with every indication of continuing this month (which traditionally posts cost-of-living figures above the average) and no guarantee of the damage being confined to its first quarter. The persistent drought (with this torrid week’s rash of power cuts as one of its most immediate effects) is drying up future Central Bank reserves from grain exports to an alarming degree while this week’s global financial scare has made any chance of borrowing abroad more remote than ever – a country risk which had dipped to 1,700 points in mid-January hit 2,400 points in midweek. This lack of any alternatives will make the printing of money inevitable quite apart from probable pressures from the Kirchnerite wing of the ruling coalition for a “Plan Platita” spike in public spending to buy back votes in this year’s elections.
The outside world has both frowned and smiled on the Alberto Fernández presidency by giving him one excuse after the other for underperforming with the coronavirus pandemic, the Ukraine war and now this global banking crisis. Evidently this line stumbles on the fact that all countries around the world currently face the fallout but in South America (always excluding Venezuela), only Chile and Colombia risk double-digit inflation this year as things now stand, never mind the three digits now confirmed for Argentina – nobody could seriously argue that Silicon Valley Bank’s collapse on Monday was responsible for the previous month’s inflation announced the next day. Yet nor should the potential damage from the international financial panic be underestimated or dismissed as a feeble excuse – with the possible exception of Turkey, Argentina is the most vulnerable of all G20 countries. It has long been said that Argentina’s problem is liquidity more than solvency – now the whole world is waking up to that fact with the digitally accelerated run on banks in recent days.
With these uphill challenges lying ahead, Massa’s next display of “petty advantage” might well be to bail out of a floundering government, making a winter exit like Martín Guzmán last year or perhaps even earlier.