The International Monetary Fund said on Monday evaluates the measures implemented by Minister Sergio Massa to try to stop the skyrocketing price index and added that they continue to negotiate ways of “strengthen the programme” to reduce inflation, which includes fiscal adjustment and strengthening reserves.
Before a question of clarionan IMF spokesman said they were “evaluating the measures” taken by Massa this weekend, after the April price index was announced on Friday. which rose to 8.4%.
The spokesperson added: “As we said earlier, sWe continue to discuss ways to strengthen the program and safeguard stability in light of severe drought.”
And he highlighted: “That includes policies for improve fiscal sustainability and strengthen reserves, both essential to reduce inflation, while protecting the most vulnerable”.
The government formalized this Monday a package of measures aimed at alleviating the unbridled escalation of prices which includes a new rate hike, greater intervention on the foreign exchange market and the possibility of opening imports of some items, such as food, for discourage comments.
The Fund is in the middle of a strong negotiation -now virtually— with economy officials to try to approve the fifth revision of the program because the fourth could barely pass it with a relaxation of the reserve target and the next one was on the path of non-compliance.
Any new measure means that the variables are reversed and the numbers change, so technicians need to analyze the impact on what they are trading.
A month ago, after the IMF’s spring meeting, Massa agreed in Washington with the second of the Fund, Gita Gopinath, that they would renegotiate the program because the drought had severely impacted the level of reserves and it was estimated that the government would not be able to meet the agreement.
“Everything is on the table”, dijeron of Economy and of the Fund were available to analyze all the possible options to be able to navigate in this complicated period, which includes the uncertainty of the PASO in August and the presidential elections in October.
Massa, who dreams of running for the Frente de Todos, wants fresh money to strengthen the red reserves and also his aspirations. Here because asks the Fund to advance disbursements planned in the second semester now. This is about 10,000 million dollars which would undoubtedly ease reserves, but which the IMF is cautious about granting because it fears that they could vanish in an attempt to curb the dollar.
If the BCRA’s intervention in the foreign exchange market now strengthens, the fear increases. “To intervene in only one direction, in this case by selling, is to encourage speculators to bet on a new default. We are already without reserves, deeply indebted to the Fund, without access to markets. By selling what we owe the IMF to support an exchange rate unsustainable is imprudent,” he said Hector Torres, former executive director of Argentina before the Fund, to TI have the Financial Times.
The Fund is willing to help, but it is not yet known how. Other goals could be relaxed, deadlines postponed and other maneuvers. If it were to agree to frontload disbursements, the agency would push through some reforms aimed at curbing inflation, such as a faster reduction of the fiscal deficit and the strengthening of reserves. This Monday’s press release highlights these two measures.
The Fund, it should be noted, has not said anything about what is being negotiated. He doesn’t want Argentina’s economy to explode, but is reluctant to give away such a large sum of money at a time when there is a high chance it will vanish quickly in the heat of elections. Moreover, while the United States has given the green light to a change in the program, other members of the council are suspicious of Argentina’s continued requests.
Massa expected to resolve the matter in two weeks, but time is getting longer and there is no news. Among the measures announced over the weekend is the acceleration of the agreement with the Fund and it is possible that the technicians will arrive in Washington towards the end of the month. But for now, beyond the hopes of the minister, there is no news of a possible closure and the negotiations are continuing.
Source: Clarin
