1. Understandably, last month's peso crisis shook confidence in #Argentina and battered President @mauriciomacri's public image, down from 45% to 36% in the May @Poliarquia_ poll.
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5. True, the subsequent deficit reduction will be "very challenging," according to an Itaú research note: to 1.3% of GDP next year, down from the 2.2% target. But the savings will not come from
#Argentina's social programs, which will face no budget cuts for at least three years.Show this thread
6. The #IMF plan, @Lagarde said, is "owned and designed" by #Argentina, and will "protect the most vulnerable in the population" while looking out "for the benefit of all Argentines." http://www.imf.org/en/News/Articles/2018/06/07/pr18216-argentina-imf-reaches-staff-level-agreement-with-argentina …
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7. Moreover, the
#IMF bailout was a lullaby to jittery investors. The sum (including an additional $5.6 billion from@WorldBank,@the_IDB and@AgendaCAF) exceeded expectations, and the program, including its fiscal targets, were "very well designed,"@Citi analysts concluded.Show this thread -
8. In addition to the budget cuts, Wall Street cheered promised legislative reforms to
@BancoCentral_AR: greater independence, no more inflationary central bank financing of#Argentina's federal deficit, and a recapitalization to prepare for any future massive portfolio outflows.Show this thread -
9. Some political costs are inevitable. Though
@USTreasury said Macri was "unleashing"#Argentina's "growth potential," the#IMF program carries an "impacto recesivo," as@pagina12 warns: cuts to capital spending, high interest rates and lower real wages. https://home.treasury.gov/news/press-releases/sm0408 …Show this thread -
10. But if the
#IMF deal is truly enough to "regain market confidence," as@jpmorgan analysts project, I foresee political rewards for President@mauriciomacri, especially if economic growth exceeds steeply lowered projections.Show this thread
End of conversation
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