According to sources familiar with the negotiations between Argentina and the IMF, the agency proposes that the country correct the price of the dollar in order to receive the requested aid. precisely that the transfers foreseen for the year, approximately US$ 10,640 million, are brought forward.
Sergio Massa, Minister of Economy, seeks in this way to strengthen the reserves of the Central Bank and once and for all transmit to the market a signal of strength after several failed attempts that have been from the conversion of debt with Anses, the 3 dollar program – in April alone he managed to get the sector to liquidate 2,435 million dollars, 23% less than in 2022 – and, more here in time, a tour of Brazil with the president, Alberto Fernández, and in which they held a meeting with Lula da Silva. The lead partner was expected to lend money to Argentina, but this did not happen.
Net reserves, the dollars that the Central Bank has without counting reserves, swaps, loans from international organizations, SDRs and gold, are negative. Argentina needs foreign exchange to provide payment for imports and as tools to intervene in a foreign exchange market in which it has parted ways with $274 million so far this month.
According to the program that Argentina and the agency signed in March 2022, the IMF is expected to issue three disbursements totaling $10.640 million over the remainder of the year. One for $3.99 million in June and two more for $3.325 million in September and December. Massa knows he can’t wait until June because the situation is already critical today. Furthermore, the conditions for collecting the June bill have not been met: Argentina did not reach the level of committed reserves or the fiscal deficit in the first quarter of this year. The economic team has been negotiating with IMF staff since the last spring meeting in Washington, where it said it would try to make the program more flexible without specifying exactly what that would mean. Something similar had been done in February when the agency agreed to do the same in the revision of the goals for the end of 2022: Argentina had not met the reserve target and with a modification the corresponding disbursement was finally made .
What would you ask, now, as a bargaining chip to speed up disbursements, says a report from the consulting firm Analytica to which Clarín had exclusive access? “Most likely, in our view, is that the body requires a devaluation, a discrete jump in the exchange rate, as a way to correct relative prices.: the multilateral real exchange rate appreciates by 18% compared to the 2019 average. A real correction of that order of magnitude, with the current rate of contract adjustment, would imply a nominal devaluation of the order of 50%, leaving the official dollar in the area of 330 pesos”.
According to Analytica, a correction of the exchange rate would have “a strong impact on the electoral base of the governing party, with a marked drop in wages and consumption in the months leading up to the elections”.
The Government’s strategy at the moment envisages negotiating the conditions of a new agreement with the Fund and weighing the effect of the drought which, according to our estimates, will lead to a loss of exports of up to 20 billion dollars this year . The deputy minister of the economy, Gabriel Rubinstein, and the head of the advisers to the ministry of the economy, Leonardo Madcur, continued their conversations with the staff via zoom yesterday as they do almost every day.
In Economy there was satisfaction with the end of the week on the foreign exchange market. The start of the cross-checks announced on Monday, which was a public holiday plus the bond intervention, “worked” according to consultancy firm Eco Go. Financial exchange rates fell for the week. “Stability that we consider temporary,” explains Eco Go. “The big picture hasn’t gotten better, it’s gotten worse”.
Source: Clarin
