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OPINION AND ANALYSIS | 13-07-2022 12:28

Argentina’s economic signals need stronger backing, analysts say

Analysts say moderate, prudent policy signals that Economy Minister Silvina Batakis announced Monday lack political support, face execution risks and won’t fix the country’s structural problems.

The moderate, prudent policy signals that Economy Minister Silvina Batakis announced Monday lack political support, face execution risks and won’t fix the country’s structural problems, analysts wrote following her first press conference. 

In an event held Monday after taking over from Martín Guzmán on July 4, Batakis reaffirmed Argentina’s commitment to its US$44-billion programme with the International Monetary Fund. She also promised to make public spending more efficient and put a hiring freeze on the public sector. 

Here’s what analysts wrote Tuesday after her announcements: 

Eurasia Group’s Daniel Kerner
– “The announcements reflect continuity of policy measures very much in line with the president’s views”
– “Even though Vice-President Cristina Fernández de Kirchner was decisive in Batakis’ appointment, she is neither from her inner circle nor an ideologue”
– “These measures are unlikely to be effective until it becomes clear that Cristina and people close to her are on board with them,” Kerner wrote, referring to Vice-President Cristina Fernández de Kirchner
– Fernández de Kirchner’s opposition to the IMF programme and differences over inflation strategy “means Batakis will struggle to deliver on these measures, and face strong opposition”
– Raising public utility prices will be Batakis “litmus test” for implementing policy that’s opposed by Fernández de Kirchner

Oxford Economics’ Debora Reyna
– “Muddling through with gradual adjustments until the next election is no longer an option”
– “Although Batakis reaffirmed her commitment to meeting the spending targets of the programme, she was vague on details”
– “We expect more stringent import controls to be imposed”

JPMorgan Chase & Co’s Lucila Barbeito and Diego Pereira
– Fiscal and monetary “measures seem aligned to fulfill both the fiscal and monetary targets, though implementation risks appear as the main challenge”

by Patrick Gillespie & Scott Squires, Bloomberg

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