In the first year of the Government, the “formation of external assets of the non-financial private sector” (FAE), which is commonly known as “hoarding” and some call “flight or capital outflow” because they are resources that leave the system was $ 9.951 billion. In 2017 the FAE amounted to $ 22.148 billion and in 2018, with an exchange crisis and IMF assistance, it reached $ 27.230 billion. Therefore, after 46 months of management, considering December 2015, the FAE amounts to $ 84.102 billion, about $ 1.828 billion per month.
The Mexican magnate and the president-elect of Argentina held a one-hour meeting in Mexico City. Alberto Fernández also met with ten other business leaders closed to Andrés López Obrador.
Negotiations between Argentina’s government and the IMF on what comes next will be tough. The most likely scenario with the new government seems to be a more accommodative fiscal policy, combined with further falls in the peso, high inflation, prolonged recession and a large debt write-down. But the outcome of IMF programs in Argentina and Ecuador cannot be understood as a lack of learning from past mistakes. One major difficulty faced by the IMF, or whoever designs macroeconomic adjustment policies in the current Latin American context, is the difficulty involved in reading appropriately – and responsibly – a country’s political dynamics and how people will react to austerity policies.
The prospect of a more united Latin American left grew on Monday after the incoming president of Argentina and his Mexican counterpart discussed reviving a regional diplomatic alternative to the Washington-backed Organization of American States. Since last year, anger at corruption, inequality and poverty have pushed conservatives out in Mexico and Argentina, while fueling protests in recent weeks that forced Ecuador and Chile to water down liberal economic policies.
Reprofiling is a distinct liability management exercise for certain well-defined sovereign debt crises. Argentina’s situation meets the required criteria and an orderly debt restructuring is possible, even likely, but if, and only if, both Argentina and its creditors put their best players on the field. Argentina’s strategy with the creditors should be to introduce reasonable doubt to a hypothetical IMF finding of unsustainability “with high probability”.