This was reported yesterday on Saturday by sources from the Ministry of Economy who are participating in the G-20 meetings in Bangalore, India At this time, they have agreed with the IMF to loosen the targets of the agreement with the organism. In particular the goal of reserve accumulation.
“We are thinking about the 2023 program based on the impact of drought and war in Ukraine” and that is why “we are trying, together with the IMF, to agree on a modification of the annual program objectives”.
The achievement of the reserve target for the current and subsequent quarters appears compromised, according to government officials and analysts who closely follow the Argentine case admit. “It is the most delicate part of the program between Argentina and the IMF”said a person with direct knowledge from the United States.
From DroughtTHE war in Ukraine, the split of the dollar, one economy which last year grew to 5% and the refusal of the government devalue At a higher rate, the central bank has not accumulated dollars as the authorities who calibrated the program in 2022 originally calculated.
Now, with a more comfortable goal, the Government intends to pave the way for two disbursements key that the IMF will send to Argentina after March (see below) as established by the transfer calendar: in June would be approximately US$4,024 million (achieving first quarter goals) and in September US$3,354 million (targets for the second quarter of this year). Both disbursements would take place in the middle of the electoral campaign and in the prelude to a possible new government. In August they are the PITCH and in October presidential elections in Argentina.
The government tries in this way any shock with the exchange rate. Also, it will keep the stocks and the import restrictions.
Massa is looking for foreign currency and in recent weeks the possibility of granting a new one soy dollara loan from Wall Street banks that grants Argentine dollar bonds under international law (repo transaction) and even accept some IMF lines for war, as the minister made known to the US government in India. For now all these possibilities have not thrived and, specifically, the only line of work for the Government at the moment is to make reserve targets more flexible and avoid noise in the months leading up to IMF money orders raising the gearbox voltage.
The novelty of this negotiation between the country and the Fund will be made official in the next few hours when the organization, through a press release, will confirm that Argentina has exceeded the objectives of the Extended Facilities agreement for the fourth quarter and will disburse 5.4 billion dollars in March.
The document will also contain an analysis of the prospects for achieving the objectives for this quarter. The latter is due to the fact that the condition for the IMF to disburse the March money must not only require compliance with the December targets, but also that those for the current quarter are in line.
Recalibrating the March, June and annual targets would avoid the need for Argentina to request a give up to the future.
Sergio Massa in India and part of his team who recently went to Washington to meet the staff are currently analyzing the numbers of the new annual reserve target for the Council. The IMF would lower its reserve target by $2 billion.
Official sources have clarified that the only annual target that would be adjusted would be that of reserves.
“In taxation and monetary financing, the idea is to support goals and not generate uncertainty. But in the accumulation of reserves it seems sensible to adapt the program to the new reality.
The negotiation between Argentina and the IMF to readjust the work agenda and fix more realistic numbers on the accumulation of reserves, welcomes the recent data on the trade balance (exports fell by 11.7% in January) and the Bank’s Plant in which it loses dollars (US$ 925 million remained in February).
The reserve discussion with the IMF is a matter of numbers.
A year ago, Martín Guzmán and the organization agreed that net reserves at the end of this quarter should be $7.7 billion. But today that goal seems elusive.
For Eco Go, the crunchy dollars the BCRA has is about $4.618 million. Even if part of it would be achieved with the new disbursement from the IMF which will arrive in March, the amount is still insufficient. The reason? Just as $5.366 billion will come in through one window, the economy will have to turn around and pay $2.702 billion for the other. About 1,000 million more dollars would be missing according to private estimates.
“The program objectives for this year are fiscal orderliness, reserve accumulation and orderly monetary planning”Massa said yesterday in India. “The consensus with the IMF is that it is best to adjust the work program for the year from the outset to provide predictability and not have to apply for waivers during the year. The goal is to be realistic and predictable so that the program is really a computer and not a role in the air that isn’t being played.”
For the former finance secretary who has negotiated with the IMF in three of the past four decades, daniel marx, “The quarterly reserve targets for March and June look very difficult to achieve”. And he adds that the annual goal that he sets himself will not be so relevant since “knowing whether it will be achieved or not is something we will know more at the end of the year and possibly with another government and a new program”.
The modification of the objectives of the reserves You would be doing the government and the IMF a favor.
At first, according to economist Jorge Neyro, “because it would help prevent the slowdown in activity from being more pronounced”. According to IMF economists there is the view that the hotter an economy is, the greater the demand for imports and, ergo, dollars. The IMF has told Argentine officials on several occasions that the economy had “overheated” since the pandemic. Making the target more flexible will allow the government to meet the target without chilling the economy so much in an election year.
With the easing of the target, the IMF will allow step away from any role in the coming months and go as unnoticed as possible. In 2019, the agency stopped disbursements after PASO. It was when Alberto Fernández questioned the schedule. The same one that now refinances.
Source: Clarin
