In the midst of efforts to build up reserves, the government is due to address payments with the IMF on Wednesday and Thursday $2,678 million. The deadlines will fall before the organization’s board meeting in Washington, where the authorities will finalize a disbursement of US$5.985 million if Argentina approves the third review of the program, a key step to meet the year-end goals and face a summer with a lower supply of dollars.
The contributionIt will be the fourth that the Fund will make since signing the Extended Facilities agreement to refinance a $44.0 billion loan contracted in 2018 and the second largest of the entire program, following the $9.8 billion injection in March. The economy ministry awaits the arrival of special drawing rights (SDRs) to offset the outflow of foreign currency in the coming hours and boost central bank reserves.
“The board of directors of the IMF is on Thursday the 22nd and the idea is that on the 22nd you send the DEGs,” confirm sources from the Palacio de Hacienda. The IMF staff reached a technical agreement in early December on third quarter targetsafter the organization sent a technical mission to Buenos Aires in the midst of the Piquetero protests and the visit of an Argentine delegation to Washington, where the negotiations ended.
In their latest statement, staff highlighted the progress made, but also warned that the situation was “fragile”. After the currency and financial crisis that ended with the departure of Martín Guzmán in July, Sergio Massa made progress in a fiscal and monetary adjustment, together with the restriction of imports, the creation of new exchange rates and a price freeze, a plan which in Washington it is still considered insufficient to stabilize the economy.
The Economy team has already communicated to the technicians that it is on track to close 2022 targets, this is the accumulation of reserves for 5,000 million dollars, a primary deficit of 2.5% of GDP and a monetary issuance of 0.8%. But the Fund is also awaiting projections for early 2023, with plans to start the fourth review in mid-January and ensure Massa weathers spending pressures in an election year.
For now, the official expectation is to catch up the minimum reserve at the end of December with the accumulation of 2.2 billion US dollars for the soybean dollar $2.5 billion from the BID and about $3,300 million remaining from the IMF disbursement. Government he will use that “bridge” to arrive at the March harvest in a context of drought, lower foreign exchange receipts for the export advance and payments to the Fund of US$ 3,300 million in January and February.
Massa celebrated last week the deceleration of inflation by 4.9% in November and the placement of bonds in pesos for 785,000 million dollarsto which was added on Monday the trade surplus of $1.4 billion in November. However, economists warn that the improvements are “transitional” due to the difficulties in sustaining disinflation, import restrictions and the acceleration of central bank money issuance.
On the other hand, Argentina will face paying for US$2.4 billion in interest with the Fund in 2023. Despite government claims to ease the financial burden, the agency kept its policy on surcharges unchanged last week. In this way, Argentina will continue to face an interest rate of 6.44% for the credit contracted in 2018 and the current program, a cost paid by the most indebted countries.
Source: Clarin
