For such a change in the trend, domestic factors should have been superimposed, such as the high one fiscal deficit, at intense rhythm of indebtedness, at adjust the rate which increased inflation, the exchange of arrears which caused devaluation. Also, immutable events that are not related to politics, such as drought what reducing the harvest by 18% from the last campaign, and others from abroad, such as hardening the financial conditions, with an increase in rates and a fall in the value of assets.
1) STATEMENT OF NEW YEAR PURPOSES
The call 28-D, that press conference on December 28, 2017 that he sealed the failure of official inflationary targets exposed on inconsistencies of the economic policy and weakened the credibility of the Government and the possibility of their realization "gradualism" to address fiscal imbalances.
The budget for this year projected GDP growth of 3.5%, inflation of 15.7% and average exchange rate of $ 19.30 per dollar, but at the same time acknowledged the goal primary deficit of 3.2% of GDP and reducing subsidies that have resulted in an increase in public service rates. It maintains growth and slow inflation it was done incompatible with a strong increase in rates and high rates of interest, a product of the financial needs of the public sector.
On greater drought in 50 years In the wild zone during the soybean and corn planting season, during the summer, more floods that affected crops in April crystallized in drop in agricultural production by 17.7% in the 2017-2018 campaign, a 112.4 million tonnes, according to the calculations of IES Consultants.
The loss for the main exporter deepened the trade deficit and the exempted currencies on the foreign exchange market that are provided only with public debt pledges. On soybean production Argentina from the 2017-2018 cycle was the poorest in nine years, and other key grains such as corn They also suffer from lack of rain.
3) DEBT EXCLUDED
Government of Mauricio Macri decided taking credit abroad before cutting taxes. This strategy has been useful for fostering the growth in financial currencies, as observed in 2017, when GDP grew by 2.9% both imports and mortgage loans have expanded. But after the election triumph of October last year, and without adjustment sensitive to public accounts, of the vulnerability of the economy Argentina and its dependence on indebtedness.
4) EXPENSES ON THE FACILITIES
On rise in interest rates in the United States, the global strengthening of the dollar and higher cash costs they could not be assimilated for Argentina, which should have turn to the Monetary Fund International to avoid falling in default. On the most restrictive policy of the Fed from the United States started flight of new investment funds for funds, on the market saturated with Argentinian titles.
The depreciation of government debt was reflected in the country's rising risk in Argentina, over 800 basis points, which marginalized the government in voluntary debt markets. Due to the decline in economic activity and devaluation, today The total public debt accounts for around 80% of GDP, the highest percentage in Latin America and similar to that in 2006, following the exchange of negotiations by the government of Nestor Kirchner.
On the value of the Argentine peso has dropped by half in 2018, under the pressure of collapse of the debt accumulated by the Central Bank. The monetary person issued letters LEBAK to absorb the excess of the pesos issued to cover the fiscal red and to buy from the Ministry of Finance the currencies for placing the debt. Policy of high rates allowed in 2017 grows and reduces inflation at the same time. But, on disarming the LADY and running towards the dollar from April 25 ended in the worst way: with exchange control, foreign exchange flight and non-inflationary inflation.
The inevitable devaluation, the presidents of BCRA Federico Sturzenegger and his successor, Luis Caputo, have brought greater tension and insecurity, to get rid of foreign exchange reserves international to contain the stampede of the dollar. After two months of a dollar artificially suppressed 20 pesos, between February 25 and April 25, a raised spiral was lifted which took him to 30 pesos in August and 41 pesos at the end of September.
With record interest rates in sands-knowledge about 60% per year– which has slowed down the economy even further agreement with the Fund The International Monetary Fund (IMF), the dollar has found short-term equilibrium prices. On reserves were re-compiled about US $ 66,000 million, about 11,000 million US dollars more than $ 55,055 million at the beginning of the year. But by that total, more than half $ 37,000 million Contributions from the IMF – $ 28,200 million – and "swap" of currencies with China – The equivalent of $ 8.725 million – the numbers they measure intensive production of dollars of Argentina this year.
7) INFLATION CLIMATE
The vehicle of Guido Sandleris In the BCRA he committed the IMF to keep up "zero" emission of weights by June 2019, a fundamental contribution to reducing inflation, though an increase in debt in LELIQ fears for the future expansion of the liquidity of the financial system and renewed exchange pressures.
On a dispute between the United States and China for tariffs is not closed. Projections of a slowing down the international economy, in the context of renewed protectionism, have become visible in the last quarter, with a collapse of world stocks and oil prices. With the external loan is forbidden, Argentina needs a vigorous demand from its business partners to continue the growth. This opportunity is threatened by trade barriers, the global slowdown activity and weaker prices for goods.
9) TAX ON FINANCIAL REVENUES
Imposition of respect for financial resources prompted the settlement of Argentine sovereign bonds, negotiating obligations and exit from mutual funds. When applied to foreign residents who have received income for LEBAK, at disarmed from this position to switch to dollars pushed a financial instability of which Argentina still can not escape.
10) THE CAUSES OF THE SECURITIES
The scandal of corruption through public works contracts, involving senior management officials Christina Kirchner and directors of leading companies, arrived at the worst moment, at the beginning of August. Affected Valuations the company, he has worsened access to credit and put it break infrastructure projects.