The Executive Committee of the International Monetary Fund approved this Friday in Washington the fourth revision of the program with Argentina, which includes an easing of the future reserve target because the government cannot meet it, e greenlighted a $5.4 billion transfer which has already entered the Central.
“The Board of the International Monetary Fund (IMF) today concluded the fourth review of the Expanded Arrangement under the IMF’s Expanded Facility (SAP) for Argentina. The Board’s decision allows for an immediate disbursement of 5.4 billion US dollars (SDR 4 billion), bringing total disbursements under the agreement to approximately US$28.9 billion,” they said in a statement.
The decision automatically released the funds to the plant. Part returned to Washington due to the cancellation of deadlines with the agency, which is why only $2.5 billion is added to the BCRA’s coffers.
It has not yet been specified how much the reserve target cut will amount to. It is estimated that they will announce it officially soon.
Two weeks ago, on March 13, the Fund’s technical staff evaluated –together with the Economy team– the performance of the last quarter of the year and affirmed that The reserve, fiscal and monetary targets have been metNO. But the review was for the end of last year, when the drought wasn’t that bad.
As also in the evaluation it is examined in the path that comes, in the document that they have presented to axis For its approval there was talk of an agreement to make the objective of accumulating reserves established in the original program more flexible, a measure that will give the Government respite in an election year which has seen the impossibility of achieving the initial objective due to of worsening drought and less activity.
After analyzing it for about two weeks, the board finally greenlighted the easing on Friday, but with a few caveats.
According to the original program signed last year, the government should have about 7.8 billion dollars in Central coffers by the end of March, and by June already 11,000 by the end of 2023 approximately 12,125, something that now seems impossible to achieve because losses due to drought are estimated to be between 15,000 and 20,000 million dollars or more.
Until now, Economics had used creative accounting and gadgets like the “soy dollar” to achieve the goal. But this is no longer enough. 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.
In Economics they were confident that the revision would be approved. They had the support of the United States, which is the largest contributing partner and the one with the most voting power. The endorsement was reportedly renewed by President Joe Biden and Treasury Secretary Janet Yellen in a meeting they held on Wednesday with President Alberto Fernández, Secretary Sergio Massa and other White House officials.
But beyond that endorsement, the board needed to be shown that there is a way to build up reserves in the future and this was refined by Minister Massa with Gopinath in a meeting Wednesday in Washington.
The agency is focusing above all on electricity subsidies because it wants more speed in the application of the regime, which should have been implemented in February. In Economy they believe it will be finished in May for families with higher incomes. In the energy package, they point out, there could be savings of around 4 billion dollars, which also includes the completion of the pipeline.
Massa also announced on Thursday other measures aimed at strengthening reserves. He said the export regime would be expanded with the “agricultural dollar,” which would temporarily extend beyond soybeans to other regional products. And he also announced that they will try to simplify the various exchange rates so that they don’t have as many dollar varieties like Qatar, Coldplay, Malbec and others.
The idea of multiple exchanges is something that goes against the dogma of the agency, but until now it has tolerated it with “waivers” or thanks because – like the soy dollar – it is a “creative” resource that has served to support reserves in red.
The minister also aims to obtain 3,000 million dollars from international organizations for the central coffers, they told Economy.
Even with these measures, Economy calculates that there will still be about $3,000 million left to finish moving smoothly in an election year where there can be a lot of political uncertainty and struggle.
Source: Clarin
