The "enigma Alberto": doubts about the economic policy that the candidate intends to carry out if he wins the elections

From transforming the country into a "new Venezuela" to a program that will surprise you with its super orthodox characteristics. From his broad victory in the primaries, almost a month ago, all kinds of speculation was woven about the type of government he would carry out Alberto Fernandez if he is finally elected president on October 27. But he was himself in charge of giving few clues about what he intends to do or who will accompany him in the management.

These unknowns will not be revealed until at least the day after the election. Those who have known him for years point out that he is a "pragmatic", implying that he will not be carried away by purely ideological reasoning., but will act in a practical way. This type of reasoning reassures those who listen to it, since the conclusion would be more or less the following: the problems left by the government of Mauricio Macri they leave little room for maneuver, there is no chance that they will not develop market-friendly policies.

The last steps that the current administration was forced to take are already preparing the way for what is coming. The exchange control provided by the economic team this last week was probably the least questioned by the entire opposition. Everyone agrees now that some type of restriction to the movement of capital is needed in this emergency. It would not be in Alberto's plans to lift the controls and possibly not have the possibility to do so. Their great challenge, in any case, will be not to make them more restrictive over the months.

If something is more than clear it is that if he arrives at the presidency he will not enjoy the "honeymoon" enjoyed by most of the brand new presidents. Macri had it and was able to finance the large fiscal deficit inherited from Cristina Kirchner with millions of debt placements in the financial markets. Until in 2018 investors said enough and forced the government to knock on the doors of the IMF.

Alberto Fernández will start with a very complex panorama. You will not have access to voluntary debt markets and the IMF has minimal disbursements ahead of you (only USD 4,000 million in 2020). Therefore, debt restructuring is an obligatory way to deal with the complications to face next year's maturities.

The Government proposed a swap without taking away capital or interest, but with lengthening terms. The lack of support from the opposition allows us to deduce that Frente de Todos would carry out a more aggressive proposal, with the removal of capital, also of interest and lengthening of terms.

The fact that Guillermo Nielsen is one of Alberto Fernández's obligatory referents also says a lot. He was the one who negotiated around the world the swap of 2005, which had a record removal left more than 24% of the creditors outside, by refusing to accept the proposal. The brutal fall in the price of bonds reveals that the markets expect a similar withdrawal, although they could be wrong. The rebound of the last days, which brought the country risk from 2,500 points to almost 2,000, reflects this less dramatic vision of what can come in debt matters.

Alberto Fernández does not want to leave great definitions before the end of October elections. And in his statements seems to balance between sending messages of rationality to investors and at the same time try to conform to the "troop", where Cristina Kirchner, Sergio Massa, the Cámpora and the Peronist governors are mixed.

In Spain they considered that the candidate of Frente de Todos was shown as a "moderate", after speaking in Congress and holding various interviews, which included the number one Santander Group, Ana Botín, The most influential banker in the world. In diplomatic tone, she suggested "keep Argentina integrated into the world". It was a kind of revelation about the fears that exist in the international community.

Alberto Fernández does not plan to reveal who will be in charge of the Ministry of Economy in its management at least until the elections. It is not known whether Guido Sandleris will continue to lead the Central Bank, where it remains in a precarious position since it was anointed by decree and has no Senate agreement.

Some dream of the possibility of a sort of "Lula effect". In 2003, upon assuming the presidency, the Brazilian appointed Henrique Meirelles, number one of BankBoston, at the head of the Central. It was then a very strong signal for the markets, which distrusted a president from the bowels of trade unionism. But nevertheless, It is not clear if Alberto is willing or interested in taking a similar step, which generates a real helm and changes the negative expectations that investors have today almost overnight.

Since winning the primaries, he left a series of signs and phrases that were far from bringing peace of mind to the financial and business world:

He maintained a hostile stance with the IMFHe made it clear that he does not agree to keep the agreement. It was after a meeting with the technicians sent from Washington.

Although he assured that his will is to pay the debt, he immediately clarified that it cannot be done at the expense of people's suffering. So he hinted that a renegotiation is coming although nobody knows the terms. The plummeting of dollar titles and short-term pesos reflect these fears, in addition to the controversial "reperfilation" decided by the Minister of Finance, Hernán Lacunza.

In a statement that generated confusion, He said in Madrid that oil cannot be for multinationals to take it. No one understood what he meant, at a time when Argentina needs to attract millions of investments for Vaca Muerta.

He blamed Argentina's setback on policies that come from the United States. And at the same time he worried about strengthening ties with Europe. Although he did not say it, his words allowed to transcend the scarce (if not void) attunement to the White House.

The visit to Portugal seems to confirm its intention to keep public accounts in balance. He had emphasized before businessmen ten days ago that the management of Nestor Kirchner was the only one that maintained fiscal and commercial surplus in the four years of government. The Portuguese exit from the crisis was based on a strong commitment to budget adjustment, under the tutelage of the IMF and also of the European Central Bank. But it is never easy to get it in Argentina, much less in the middle of a galloping recession.

What does seem quite clear is that among the main decisions that he would take if he came to power is to promote an injection of funds into the pockets of employees and employees. But it will not be so easy to move from electoral promises to practice, taking into account the high inflation, fiscal deficit and difficulties that companies, especially SMEs, drag.

Markets moved in recent days based on other parameters, in the absence of concrete signals about what may happen after December 10. For now, they celebrated that the exchange control loosened the fall of reserves, which had dramatically accelerated in the three weeks after the PASS. And there were also purchases taking advantage of the fact that the falls in both bonds and stocks were so aggressive and fast that some began to see buying opportunities.

Especially some very speculative investors who were without exposure in Argentina. However, there are a majority of international funds (such as Templeton, Black Rock, PIMCO or Currency) that have opted for the country in recent years and now must face millionaire losses. We will have to wait many years for them to trust local assets again. They already burned too many times.