The IMF has started a closer monitoring of Argentina with an eye on the accounts and inflation. With this objective in mind, a delegation of technicians landed in Buenos Aires on Friday and had their first meeting with Sergio Massa’s team to anticipate the verification of the objectives for the third quarter and the prospects for the end of the year, as part of the due program of refinancing 40 billion dollars with the organism.
The visitors resumed the conversations they had already started via Zoom with the Chief of Cabinet of the Ministry of Economy, Leonardo Madcur, and will continue this week with face-to-face and digital meetings, without the participation of Massa, who went to L’ Indonesia will participate in the G20. “They met with some technicians to follow the numbers, virtual hybrid face, but it was not a mission” confirmed to the Ministry of Economy.
The meetings in Buenos Aires will have as background the appointment on the other side of the globe which will be held this Wednesday at 11:30 in the morning the President and the Minister of Economy in Bali with the head of the Fund, Kristalina Georgieva, and her number two, Gita Gopinath. The interview on the sidelines of the leaders’ summit will be to insist on the reduction of surcharges for over-indebted countries and to take stock of how the program will continue.
Although close to the minister, they argue that the audit is on track and so are able to secure a disbursement of US$5,800 million in Decemberthe disembarkation of the Fund coincides with the climate change that the government began to address in October due to the difficulty of accumulating reserves and containing inflation, to which was added last week the greater resistance of banks to lend pesos after the elections of 2023.
Already in its latest report on prospects in the region, directed by the director of the western hemisphere department, Illan Goldfajn (now on leave due to his candidacy for the presidency of the IDB), the agency warned in October of a scenario of “worsening ” in Argentina due to internal “vulnerabilities” and political uncertainty, for which he recommended a “tightening” of measures to stabilize the economy and control prices.
Behind the doors of the Palacio de Hacienda, the expectation is to approve the third audit after achieving a lower-than-expected primary deficit in September and meeting the reserve and monetary target, as acknowledged in its latest review last month. The problem, according to official sources, is that now they are “Sailing Through Troubled Waters” a prospective factor that the IMF technicians also evaluate before presenting their report to the board.
Trading, which includes exchanges of current month data and projections, will take place amid the inflation spread for October, which is released on Tuesday. Advisors expect a floor above 6.2% in September, while in the Economy they do not rule out a rebound, a fear that led Massa to announce the price freeze for four months and will likely reignite pressure from the IMF to continue raising rates.
On the foreign exchange front, 12 months have already passed since the Central Bank began the “micro devaluations” of the official dollar, a rate which reached 121% per year in effective terms last week. Still, it couldn’t stop the sale of $1.3 billion, 25 percent of the currencies bought with the soybean dollar, according to Ecolatina. Close to Massa believe that “for now” it is not necessary to repeat this provision and trust in the saving of foreign currency with the restriction of imports.
To contain the dollar and inflation, the Fund expects the fiscal adjustment policy through greater adjustment of tariffs, a sharp reduction in social spending and an increase in taxes. In Washington they want to know how the 2023 Budget, under discussion in the Senate, will end. They also warned that a setback in the issuance of peso bonds must be compensated for with taxes and less spending or more inflation.
The Fund’s technicians have personally verified the “risks” they usually write about in their cold minutes. on Friday they were received by a piquetero protest in the refusal to cut social plans and in the demand for food delivery. His arrival also coincided with the announcement of Fair Prices, one of the measures that Massa will have to explain at the end of the month when he travels to Washington to finalize talks with the agency.
Source: Clarin
