The International Monetary Fund is negotiating at full speed in Washington with the Argentine technicians the easing of the reserve accumulation target established in the initial program with Argentina, given that this objective has been impacted by the war in Ukraine and the severe drought affecting crop yields and dollar revenues.
This change, revealed days ago by Economy and not denied by the IMF, would raise a government in the election year Already complicated by inflation, which would exceed 100%. He would no longer have the obligation to accumulate the 9,800 million dollars in the Central by the end of 2023 than the set goal.
As of press time, a mission from Argentina –Gabriel Rubinstein, Leonardo Madcur, Raúl Rigo and Lisandro Cleri— Negotiated with the technicians of the Fondo –Luis Cubeddu, Ashvin Ahuja and others: details of the new quarterly and annual goals.
But the political “thread” took place thousands of kilometers from Washington and Buenos Aires, in the Indian city of Bangalore, where the minister Sergio Massa met over the weekend in the context of the G20 with the managing director of the organisation, Kristalina Georgieva, number two Gita Gopinath and also with the international adviser to the US Treasury, Jay Shambaugh, key players when it comes to renegotiating any goal. There the go-ahead was given to loosen the reserve target and Massa let the press know.
“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 is not being played,” said the Indian minister.
“War and drought play a role in our economy and it is best to deal with it setting achievable goals so you don’t have to revise every quarter”He added.
It is expected that in the next few hours a statement will be made known which establishes the new reserve target (annual and quarterly) and it will be necessary to see if the Fund will ask for something in exchange for flexibility. Even if other objectives of the program – such as the fiscal deficit or the monetary question – will also be affected by this 2023. Every word and number is being examined by the technicians and the various departments of the Fund.
Technicians in Washington they were preparing to approve the fourth program review, effective in the last quarter of the year. The targets for reserves, the fiscal deficit and monetary issuance were met in that period and therefore, when the Fund’s board approves it in March, $5.4 billion will be unlocked. But, as usual, the technicians also reviewed the way forward and this year the reserve accumulation numbers did not close.
According to the original programme, the Government was to have it in the Power Plant’s coffers by the end of 2023 approximately US$9,800 million (add 4,000 this year)something that now seems impossible to achieve.
Due to the drought affecting the crop, the war in Ukraine, various stocks, the dollar gap, an economy that will grow less this year and the government’s refusal to devalue at a higher rate, the Central Bank will not he accumulated dollars as he had expected calculated in the initial schedule.
Until now there had been some creative accounts and gadgets like the “soy dollar” used, which the Fund tolerated with waivers (thank you) to keep the program running. But that’s no longer enough because there isn’t enough soy to liquidate.
With a more comfortable reserve target, the government will not need waivers and will be able to avoid major shocks to the exchange rate in an election year. The way is also cleared to obtain two more disbursements that are already expected before the PASO elections in August and the presidential elections in October.
The organization led by Georgieva – with the endorsement of the United States– he was sympathetic to his biggest debtor as he wants there to be no explosion in the country and has a very latent memory of the last STEP where payments were suspended. With more air in the objectives, this year the IMF would seem to go less unnoticed at a time when part of the Frente de Todos delegitimizes the agreement and calls for a complete renegotiation.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.