In full negotiation, the IMF number two went through Chile and Brazil, but skipped Argentina

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The number two of the International Monetary Fund, Gita Gopinath, launched this week tour of the Southern Cone, which includes Chile and Brazil, but did not stop in Argentina, the country that has the largest debt to the IMF and with which it entertains these days a crucial negotiation.

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The Indian-American economist is the agency’s first deputy executive director and right-hand man of Kristalina Georgieva, the chief executive officer. It is the official who met last month in Washington with Economy Minister Sergio Massa to then announce that they would renegotiate the program that Argentina has with the Fund due to the profound impact that the drought has caused in the original agreement and due to the failure to comply with guidelines.

Right now, the agency’s technical teams and those of the Economy are virtually negotiating the details of this “recalibrated” program, which seeks to give the government air so it can pay the debt owed on the $50,000 million loan granted in 2018.

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All options are on the table: it may be that targets are made more flexible, that deadlines are postponed or advance disbursements until the end of the year. On the latter case about 10,000 million dollars would come bolster reserves amid election campaign uncertainty and when inflation is out of control.

Therefore, beyond the fact that the entity wants to remain unaware of Argentina’s political and electoral fluctuations, the ongoing negotiations will mark the field in the future and make the Fund part of the presidential campaign conversation.

In this context, Gopinath visits his neighbors, without stopping in Buenos Aires. It is not uncommon for the referee to avoid Argentina at this delicate moment. The IMF is today at center stage in our country: many see it as an inevitable lifeline in this period, a computer for a chaotic economy, while others perceive it as a external agent who will impose rules which can harm the population.

In fact, while Gopinath was flying over the area, the vice president Cristina Fernández de Kirchner launched a series of tweets criticizing the deal original signed in 2018 by the government of Mauricio Macri.

Gopinath first trip to Santiagowhere he met with the head of the Central Bank Rosanna Costa and Finance Minister Mario Marcel with whom he discussed Chile’s economic prospects. Then he held a meeting with students from the University of Chile on climate change, artificial intelligence and what economists have learned about the pandemic.

Then crossed in Brazilwhere he participated in the Annual Conference of the Central Bank of Brazil and lectured on inflationary challenges in emerging countries. He then met with Lula da Silva’s Economy Minister, Fernando Haddad, with whom he discussed the Brazilians’ “strategic agenda” on an inclusive, sustainable and “green” economy.

consulted by clarionMartín Castellano, head of research in Latin America at the Institute of International Finance, said in Washington that trips like Gopinath’s “have institutional purposes and also include quasi-academic activities planned well in advance. It’s not about missions negotiate programs or financing lines, which require another type of infrastructure in terms of resources and technical support. Therefore, the “no visit” to Buenos Aires should in no way be considered as a setback”.

However, he points out that “it would have been strange to visit Argentina at this time. Even beyond the electoral question, which obviously always complicates the negotiation “.

You understand that too the Fund can stir up resentment in some sectors of Argentine society. “It is a sensitive issue for both parties, but these visits also generally involve arriving with a technical team and staying for several days and are guided by the head of mission, so clearly this trip was not a good opportunity, beyond that it may have crossed Argentine airspace.

On the importance of the negotiations, Castellano underlines that “the continuation and accumulation of distortions in the left economic policy an external financing gap that we estimate at $14 billion this year. Given impending debt maturities, the fragility of the foreign exchange market and the Central Bank’s lack of dollar liquidity, negotiations to adjust the program disbursement and maturity schedule with the IMF are essential.

He adds that “however, any change to the schedule implies an additional catch a set of fiscal, monetary and currency corrective measures to achieve an improvement in expectations that allows for a slightly longer-lasting stabilization. Agree on this other part, especially in an election year, is what is more complex. The goal is to go through the electoral period calmly and arrive in December, when the next administration will certainly have to face a new renegotiation of the agreement as part of a stabilization programme.

Massa is in a hurry to seal the new program not only to curb inflation but also because on this depends his hope of a presidential candidacy. She is on good terms with the influential Gopinath – whom she calls by her first name – but he has not been able to see her since that meeting in Washington.

The minister had planned to resolve the matter in two weeks, but times have lengthened and there is no news. When he announced new measures to curb inflation days ago, he said they would speed up negotiations with the Fund. But for now, beyond the hopes of Tigrense, there is no news of a possible closure and conversations continue via Zoom.

Washington (correspondent)

Source: Clarin

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