Companies believe that after the October election the financial landscape will worsen. Another wave of price increases and "preventive" layoffs is expected
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<p class="normal" style="text-align: left;"><span lang="es">Just thinking about it becomes unbearable. Some will even think it would be "better not to know." But the truth is that it is the scenario that is being considered in some of the leading companies and banks in the country. Specifically: Is the worst yet to come? Could it be that there are still the toughest weeks of the crisis?</span>
The reluctance of the Monetary Fund to send the US $ 5.4 billion that, in principle, the agency had to disburse this week is just a symptom of the fragility of the situation.
Without this disbursement in time, the "market" will take note that Argentina lacks foreign exchange to meet all commitments, and will have less firepower to respond to eventual exchange pressure. "The accounts do not close," coincide two of the most renowned economists in the City.
Will Macri accept to tighten the capital controls that were announced just a couple of weeks ago? Would you do it, knowing that such a measure will overheat the parallel dollar market even more?
In the main banks of the City they believe that, before December 10, the key date to observe is next October 27.
If everything goes as planned by the main political consultants, Alberto Fernández will become the elected President of Argentina that Sunday, leaving Mauricio Macri without real power for the next 44 days.
And that is why the "red circle" already raises the key questions: Will Macri take substantive measures if the exchange crisis worsens, as many of the consultants in the City of Buenos Aires assume? Would you have incentives to do so?
For now, what is known is that the BCRA will have fewer dollars to comply with everything: debt payment (public and private) and dollarization of portfolios, in a context where the price of "counted with liqui" will continue to open the official".
What is taken for granted is that the IMF delay will, in principle, affect the diminished stock of reserves of the Central Bank. That money would be used to pay the maturities of Letes (in dollars). Even with the reperfilation, until the end of the year, investors of these letters will have to be paid for US $ 2,950 million.
To this we should add a need (in pesos) of $ 265,000 million – due to maturities of Lecap and fiscal deficit – that, without the contributions of the IMF, would have to be issued, with the risk that part of that issuance translates into greater pressure on the exchange rate, even with the stocks working.
This is how the short-term financial scenario is raised, dominated by uncertainty.
In fact, there are payments of bonds in local currency – the first one next Friday, the so-called Monetary Policy Bonus, for the equivalent of US $ 400 million – that could end up pressing on the "counted with liqui".
Companies take preventive measures
The recent economic history of Argentina already knows the effect generated by the different exchange markets. And it is already known that, either as illegal or as "counted on liqui", these quotes – initially marginal – end up influencing the devaluation expectation of the "official".
The last time it happened in 2016, at the start of the Macri administration: the devaluation brought an inflationary shock, and a process that could not yet be put on track.
But returning to the political dynamic, some issues to take into account for the first fence to jump: October 27.
Today, everyone put the magnifying glass on what will happen the day after. From the political scene (today the most predictable of all) to the economic, financial and business landscape. All are interrelated. And these last three are summoned by the same objective: to cover oneself with the unknown, which today has to do with the measures with which the government of "Los Fernández" will debut.
Leading companies, by case, already take coverage measures. The most important companies have just announced new price increases. The second round in the last month. They are increments that go from 8% to 18%, nothing less.
And why, if with the adjustments of four weeks ago they had already crossed much of the last devaluation? Responds to the manager of a leading food company, who obviously asked for the reservation of his identity: "Until now we privileged to maintain our market share at the cost of profitability. But the crisis continues and we cannot let our balance sink further. We sacrifice 'market share', which we will try to recover later. "
With the sense of anticipating what will come, it is already common that in the talks in the business chambers there is talk of the implementation of the "double compensation" once Alberto Fernández is head of state.
"What do you think the big companies will do in the coming weeks?", Rhetorically launches one of the executives who participates in the conclaves of the Industrial Union. "There will be layoffs of all those personnel that until now endured but that we do not know if we are going to need from here to a year", complete.
There is another issue that plays in the heads of multinational directors: at this exchange rate close to $ 60, layoffs are "cheap" in terms of dollars.
The long transition weeks
Inevitably, this panorama is linked to the social situation, which broke down in recent weeks, after the last devaluation.
The social groups most helpless by the crisis have already shown that uneasiness as the crisis progresses. They took to the streets to make their claims heard.
What will happen from October 28, if there is an elected president and another who remains in the Casa Rosada but waiting for his constitutional mandate to be fulfilled?
The issue is analyzed not only by political scientists but, above all, by businessmen and financiers. In the directories it is analyzed which will be the Argentina that will be from the economic and social point of view in the next weeks.
Will the same executives or business owners who pick up the phone today when summoned by an official of the Treasury, Production or from the Central Bank, will continue to do so from Monday, October 28, if the economy – as the majority supposes – is not stabilized ?
Cristina Kirchner's experience with the stocks was that the fall in reserves intensified as time progressed, and she was forced to tighten restrictions. From the end of 2011 until she left, Cristina Kirchner pressed the stocks on 37 occasions.
Today, in terms of currency outflow, the same dynamics must be expected for the simple reason that most companies cover themselves by dollarizing.
The question, in any case, refers to whether Macri will press the button again so that a measure of those he does not like comes out. Of those who never even thought about implementing.
And here such a scenario should not be interpreted in purely political terms. The question that must be asked is whether the officials who are currently in full functions will be after October 27, when they know that the end is very close.
Specifically: will these officials sign any resolution or decree that may cost them dearly, in judicial terms, a few weeks later?
Greater exchange pressure, an acceleration of inflation, in a context of social tension "in crescendo" due to the increase in poverty and also unemployment? Easy days are not coming. That is sure.
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