The board of directors of the International Monetary Fund approved on Friday the second revision of Argentina’s program with the agency, which will allow the release of approximately 3,800 million dollars for our country in the coming days. She said the body “the objectives have been achieved”, including that of reservations which was in doubt.
However, they granted two waivers (thank you) for two reasons: one for non-compliance related to foreign exchange restrictions and “multiple currency practices”. The other for “applicability” for two targets at the end of September, for which data were not yet available, including the primary budget balance.
IMF sources explained that these exemptions are technical issues that usually apply “when there are multiple exchange rates, such as with the liquidation of the soybean dollar” and also because they do not yet have fiscal data for September.
“The derogations are not due to the failure to achieve the objectives, it is a technical matter,” the officials of the Fund pointed out after the approval.
At a meeting at the Fund’s headquarters in Washington, the board of directors discussed in detail the staff contract in which the Fund technicians, led by Luis Cubeddu, and the Economy team had been working for several weeks, with the councilor Leonardo Madcur as the main reference.
In a statement, the IMF said: “The Executive Committee of the International Monetary Fund today concluded the second revision of Argentina’s 30-month agreement, which allows for an immediate disbursement of approximately $ 3.8 billion.”
He added that “the decisive actions of the new economic team have been instrumental in stabilizing the markets and starting to rebuild confidence”.
Furthermore, he noted that “The relevant objectives of the quantitative program at the end of September have been achieved, including net international reserves and monetary financing of the fiscal deficit. “
“In the context of a more challenging global environment and ongoing internal risks, strong and continuous implementation of program policy will be key to achieving program goals, strengthening stability and ensuring sustained and inclusive growth,” he added.
The agreement was practically ready on a technical level weeks ago, when the minister Sergio Massa was in this capital and met with the officials of the Fund, and with the managing director, Kristalina Georgieva. However, there was a whole bureaucratic process of drafting the documents that had to be refined to be presented to the executive directors, who are the representatives of the member countries.
For approval in axis was US support is essential, given that the first world economic power is the country with the greatest weight in the directory and nothing is approved without its endorsement. Massa had promised the White House and the Treasury that Argentina would achieve the goals set in the program.
A few weeks ago, the technicians had said so Argentina had achieved “most” of the objectives set by the program, except for the reserves which should have been a minimum of $ 3,450 million in June, but were not met because they were insufficient by about $ 300 million. But now the accounts appear to have been closed, although there have been a couple of specific exemptions.
The technicians believed that the measures that Massa had taken to encourage the liquidation of the soybean, plus the new funds from international organizations that he had managed in principle to unlock, would help to regain credibility that the objectives would be met.
The approval of the IMF on Friday, in fact, activates the loans for 1,200 million dollars that the Inter-American Development Bank had promised to disburse, linked to the implementation of the program with the Fund. as he knew Clarione, the directors of the IDB already have the cards in hand and will meet next Wednesday to give effect to that quota of free availability that will directly increase the reserves.
Although the objectives of this review have been met, the IMF has issued a couple of warnings. “Achieving the headline budget deficit targets of 2.5% of GDP in 2022 and 1.9% of GDP in 2023 is essential to moderate import growth, build up reserves, strengthen debt sustainability and further reduce dependence on central bank deficit financing. This will require further tightening of expenditure controls and greater efficiency of subsidies and social spending, which in turn would create space for critical energy infrastructure projects and targeted assistance to the vulnerable, “they said. .
In addition, they noted that “the continued and resolute implementation of the monetary policy framework is essential to maintain positive real interest rates and cope with persistently high inflation”.
Source: Clarin
