Due to the impact of the drought, the International Monetary Fund reduced reserve target by US$3.6 billion through March 31 and by US$2 billion through 2023as they said clarion Economic sources, even if the agency will limit itself to publishing a technical report with the exact amounts in the next few hours.
The agency’s executive committee approved the fourth program review with Argentina on Friday and has given the green light to a disbursement of 5.4 billion dollars. On Saturday, it issued a statement warning the government that “stronger policies to safeguard program stability”, along with other caveats.
The council must publish the so-called personnel report in the next few hours, where the technical details of the program and the path to follow are established. The agency said targets up to December 2022 had been met and the disbursement was made accordingly. But the prospects for the future It seems more complicated and in this framework they have agreed to lower the reserve targetwithout saying how much.
“The economic situation has become more difficult since the beginning of this year in light of the increasingly severe drought and political setbacks. Given the magnitude of the climate shock, some downward adjustments are justified of reserve accumulation targets, although a stronger policy package is now needed to safeguard stability and maintain the programme’s anchor role,” they said on Saturday.
According to the original program signed last year, the Government should have approximately 7,800 million dollars in Central’s coffers by the end of March; in June 11,000 and at the end of 2023 around 12,125, something that loomed impossible to fulfill because it is estimated that losses due to drought will be between 15,000 and 20,000 million dollars or more.
With a reduction of 3,600 million at the end of March, the Government would see great relief at a time when there is little harvest to liquidate and therefore they only have to keep 4,200 million in their coffers. The accumulation would be compensated throughout the year, but with an overall drop of 2,000 million at the end of 2023.
Until the end of the year, the Economy used tools such as the “soy dollar” to achieve the goal, but this is no longer enough. With a more comfortable reserve target, the government will be better able to deal with the drought and its aftermath without specifying “waivers” and will be able to avoid major exchange rate shocks in an election year.
During his visit to Washington, Minister Sergio Massa agreed with the Fund on the measures to be tested promote exports and accumulate reserves because the organism does not happily lower the objectives: it wants to see a concrete path to know what will be done in the future.
The Fund has already warned in its press release – and will ratify it in the information report – on the matter the need to speed up the removal of energy subsidiesespecially for high-income families. In Economy they say they hope to have the scheme ready by the end of May.
They also search more reserves with the announced “agro dollar”, promote exports and strengthen the trade balance, with differentiated exchange for a limited period for soybeans and other regional products such as rice, peanuts and others who want to join.
While the government is adopting a more flexible reserve target this time around, it has come under severe pressure on aspirations for an easing of the fiscal deficit limit. Though it has tried to ease that focus, especially in an election year, the Fund has said so it does not want to go from 1.9% of GDP by 2023.
Despite the commitment to maintain the fiscal target, it has been resolved protect state investments in infrastructure, especially in energy terms by aiming for the Néstor Kirchner gas pipeline, they say in Economy.
In last Monday’s press release, the number two of the Fund, Gita Gopinath, also warned about a topic of high political tension. She said the cost of the pension moratorium approved by Kirchnerism “must be mitigated through strict regulations targeting entry only to those who need it most. In Economics they say that it has been agreed to focus the reform on the sectors of the elderly population that are most in need of this exceptional tool.
Source: Clarin
