The economic team will tackle two key missions over the next few days to try to ease the financial situation. Minister Sergio Massa will travel to India this Wednesday to attend the G20 finance ministers meeting, while other officials will travel to Washington to meet with IMF representatives.
The G20 meeting will analyze the slowdown of the world economy and the increase in debt of developing countries. In this framework, the head of the Finance Palace will maintain bilateral agreements with various peers, including Fernando Haddad, Brazilian, with whom he is currently advance in a mechanism to finance imports.
Massa already met last week with the Indian ambassador, Dinesh Bhatia, to expand exports to the Asian giant – Argentina’s fifth trading partner – and promote the use of local currencies in bilateral trade. They also discussed the G20 summit which will be chaired by the Government of India with special attention in financial relief to the countries most indebted by the main creditorsincluding the Paris Club.
The rest of the economic team, led by Gabriel Rubinstein and Leonardo Madcur, will travel to Washington to meet with the IMF mission on Friday. They are asking for agency approval of the agreed targets, which will be discussed by the IMF board at the end of March. Government must unblock payment of $5.3 billion to meet $2.7 billion payment due on March 21-22
The negotiations began more than a week ago with the visit of a technical mission to Buenos Aires, where the Ministry of Economy showed the “exceeding” of the objectives for the third quarter of 2022. At that time, the primary deficit was reduced to 2.4% of GDP (excluding interest on debt) by deferring expenditure payments and net reserves added $5 billion with the help of a new soybean dollar and tough import restrictions.
The most complicated chapter of the fourth revision of the Fund will be the roadmap for 2023, an itinerary that began with short circuits due to official pressure to make the agency’s requests more flexible in the face of the impact of drought and war. Massa’s team would ask for a pardon or “waiver” amid the unstoppable hemorrhaging of reservesaccelerating inflation and signs of stagnating activity in an election year.
“What the Fund proposes is to honestly discuss the impact of drought. We see intelligently from the technical staff who start to see what the impact of drought is, but we are also aware that we need to put more effort than others,” Massa said on Saturday in an interview with CNN in which he assured that the agreement with the agency is enforceable. “Yes, of course, yes, yes,” he said.
In this Massa differed from Máximo Kirchner, who at the end of January he warned that the expiring route is “unpayable” and insisted on renegotiating the deal due to the aftermath of the war. “Drought, net payments to the IMF, longer maturities for debt restructuring and the typical dollarization of an election year will put more pressure on reserves,” said Centro Studi Scalabrini Ortíz (Ceso).
So far this year, the Central Bank has sold more than US$ 1,000 million on the foreign exchange market. The minister has not yet managed to close a $1 billion bond-backed loan with foreign banks, an operation complicated by the sharp drop in Argentine currency bonds. And he received the body’s disapproval of the buyback of dollar debt with bookings starting in mid-January.
“The concern about the lack of dollars continues, as reserves continue to be sold every day, and 3.3 billion dollars are missing achieve the goal by the end of March with the IMF. For now there are only official reports without many details of a $1 billion repo. Other possible alternatives are a Soybean Dollar 3, more CEPO and/or more disbursements. The goal is the minimum (a derogation could be requested), the market is worried about the film”explained an FMyA report.
The Government has promised this year to lower the primary deficit to 1.9% of GDP, with a monetary issuance ceiling for the Treasury of 0.6% of GDP and the accumulation of US$4.8 billion of reserves. While inflation is not a target, January’s acceleration to 6% monthly puts more pressure to contain the peso glut and its impact on the exchange rate gap. For this Massa analyzes measures to “sterilize” the monetary surplus.
AQ
Source: Clarin
