The Economy Minister, Sergio Massa, arrives in Washington this Thursday morning to participate in the Assembly of the International Monetary Fund and the World Bank, but they should hold parallel negotiations to that of global finance to negotiate the next disbursement of the programme, which is complicated.
At the end of the month, the agency’s board of directors approved the fourth revision – which covered the last quarter of 2022 – and made the related disbursement. But staff reports come with a series of notices for the first quarter of this yearmainly due to the impact of the drought which has drastically reduced the accumulation of reserves and for this reason the Fund has agreed to reduce the target of funds in the Center (3,600 million dollars at the end of March and 1,800 in all of 2023).
However, it is estimated that this flexibility will not be sufficient to successfully complete the fifth revision.
The Fund has already warned: despite compliance with the reserve target, the deficit target (1.9% of GDP at the end of the year) it will not relax. The minister must negotiate as much flexibility as possible and at the same time demonstrate that it is activating the measures that the Fund requires: an acceleration of the removal of electricity subsidies to higher income households; a limit to the new pension moratorium (it is necessary to reduce at least half of the 800,000 envisaged) to mitigate the impact on the deficit and a reorganization of social benefits.
Deputy General Manager GIta Gopinath spoke about Argentina in an interview with Village from Madrid. “The situation in which the country finds itself is very difficult. There is a shared understanding with the authorities that even greater efforts are needed to have a good macro environment. To be able to have a consistent fiscal policy, monetary policy and exchange rate policy that can help reduce inflation and avoid major disruption in the domestic bond market.”
Massa meets with Gopinath on Friday to refine the details. Meanwhile, the technical teams of the Fund and the Economy work all week on the numbers.
The reserves are still scarce and Massa juggles with the “sour dollar”, but he needs more. He knows that it is necessary to “scratch the plate” from all sides to be able to raise funds and international organizations are the closest source and with the fastest disbursement. And for this reason the government had asked for support from the United States on this issue when it was with President Alberto Fernández and Joe Biden in the White House at the end of March.
Before arriving in the American capital, Massa made a stopover in Santo Domingo to meet Wendy Sherman, the US deputy secretary of state, who will continue his trip to Argentina shortly thereafter. This visit follows the Fernández-Biden summit.
Priorities for Argentina and the United States will be defined at the meeting, the official will raise concerns about mining, food security, Chinese ports and waterways. Massa will put on the table the US agreement on tax breaks for companies investing in the mining and food sector in the US, which leaves out Argentine companies while the government tries to include them. They will also ask for the resumption of the Generalized System of Preferences and, above all, they will ask for the support of the United States to obtain more financing from the multilaterals.
Minister calls for another $3,000 in IDB loans, the BM and the CAF because –although a part of them is destined for infrastructures– they enter dollars and serve to swell the reserves. In Economy they want to take out loans as quickly as possible. Fernández asked Biden to help him before the organizations to build “a bridge” to cross the crisis situation and it is possible that this hand will materialize.
But it’s not that easy, especially at the IDB. As reported in Buenos AiresPresident Ilan Goldfajn would be angry with the government because President Fernández and Foreign Minister Santiago Cafiero allegedly called the Brazilian by telephone to put pressure on him to nominate Cecilia Todesca to the vice presidency.
When Argentina withdrew Todesca and supported Goldfajn’s candidacy, they said from Economy they would give Argentina a vice-presidency and the management of a gender directorate. But none of that has materialized yet.
consulted by clarion, The IDB declined to comment on the matter. Foreign Ministry sources indicated that this information “It’s false. Neither Cafiero nor the President spoke to Goldfajn on the matter”. The Casa Rosada did not respond to this correspondent’s question.
In this climate Massa will ask for the acceleration of loans and trusts in the guarantee of the USA, a significant partner in that organization and of the World Bank.
Massa will hold the IMF plenary session on Thursday, a working breakfast at the Western Hemisphere Department, and several other meetings. You will see Kristalina Georgieva in a meeting with other ministers of the region.
In addition to the IMF, he will also meet Biden officials these days such as Michel Pyle, deputy director of the National Security Council of the White House, and with Juan González, special adviser for Latin America to the president, with whom he will examine the bilateral strategic agenda. Massa’s agenda, which will last until Saturday, includes meetings with Mathias Cormann, secretary general of the OECD, and José Antonio Ocampo, Colombian finance minister.
Source: Clarin
