Does anyone else feel there might be a peso collapse this year?

[Quilombo]

Everything hinges on the IMF agreement. The BCRA is burning budget surplus maintaining the 10-15% dirty float, but at the expense of future expiring debt. The IMF says the funds can't be used to prop the peso. Milei says the IMF funds will be used to prevent volatility in the exchange rate within an acceptable range. One of these two is lying.

My personal bet? He's going to do some Viveza Criolla shit where the money that's supposed to be spent on say payments to debtors or whatever will now be spent to keep the dollar flat, and the IMF money will be used to pay the debtors, and he'll say "See, we didn't use the IMF money to keep the dollar flat."

How can you have free markets when the exchange rate is controlled? And where is the dollarization? Why is the Central Bank still around?

That's the cool thing, you can't.

The libertarian grift is a classic bait and switch. People wanted the BCRA closed, dollars in their pockets, and less taxes/more "freedom" but instead we have Peronism with Mileista characteristics: BCRA humming, punishing tax increases from ARCA, dollars having to be sold to pay Edesur/Credit Card bills, and the "freedom" to import via an exchange rate that's 35% higher than the BCRA dollar, plus with 21% VAT, and also with tariffs over $400.

The only way I'd support taking on an IMF loan would be dollarization, but instead we're taking on the loan to do what, keep the dollar cheap? Piss away money on MEP/CCL dollars for rich people who already have dollars can go to Europe; so we can repeat 2019?

 

[LuckyLuke]

My personal bet? He's going to do some Viveza Criolla shit where the money that's supposed to be spent on say payments to debtors or whatever will now be spent to keep the dollar flat, and the IMF money will be used to pay the debtors, and he'll say "See, we didn't use the IMF money to keep the dollar flat."

I agree, I think the loan proceeds are just going to be for some BCRA circle jerk to "inspire confidence" in the market, while accomplishing essentially nothing. Something like, the IMF loan will be used to pay down maturing domestic bonds to "fortify" the BCRA while future bond offerings will be used to repay the IMF.

There's obviously a silver lining for the IMF somewhere in the fine print or they wouldn't have thrown good money after bad. Argentina already had an "exceptional" 40 billion dollar loan to begin with, and now magically get qualified for another 20 billion despite making no principal payments? Nobody on the IMF board of directors would sanely approve that unless it was somehow going to circle back to the IMF as loan repayments and a little interest *wink wink*.

 

[Redpossum]

I agree, I think the loan proceeds are just going to be for some BCRA circle jerk to "inspire confidence" in the market, while accomplishing essentially nothing. Something like, the IMF loan will be used to pay down maturing domestic bonds to "fortify" the BCRA while future bond offerings will be used to repay the IMF.

There's obviously a silver lining for the IMF somewhere in the fine print or they wouldn't have thrown good money after bad. Argentina already had an "exceptional" 40 billion dollar loan to begin with, and now magically get qualified for another 20 billion despite making no principal payments? Nobody on the IMF board of directors would sanely approve that unless it was somehow going to circle back to the IMF as loan repayments and a little interest *wink wink*.

Has that figure of 20 billion been officially confirmed now? Last I read this morning, Milei claimed it was 20 billion, but the IMF spokeswoman declined to confirm it, saying that the board of governors had yet to decide.

 

[LuckyLuke]

Has that figure of 20 billion been officially confirmed now? Last I read this morning, Milei claimed it was 20 billion, but the IMF spokeswoman declined to confirm it, saying that the board of governors had yet to decide.

Since it's not disbursed in one installment, nobody will really know until the IMF eventually halts payments. Think of it like a line of credit, and as long as the Argentine administration complies with loan conditions they can get access to the next tranche of disbursements. It could theoretically take years to access all $20 billion.

A lot of these type of "announcements" are smoke & mirrors not dissimilar to public companies saying they will "cut staff costs" to boost stock prices when in reality they are putting in a hiring freeze and letting future retirees fall off the payroll without replacements.

 

[daveholman]

Where is the free market capitalism we were promised?

Maybe if LLA picks up enough seats in October?