The IMF is a thorn in the government’s shoe. After traveling to Washington more than a month ago, Sergio Massa continues to negotiate a early disbursements that help stop the dollar haemorrhagebut the funds of the organism not listed and in the official offices they are concerned about the proximity of a “deadline”: US$2.7 billion of principal will mature on June 21 and 22, a challenging amount for an increasingly empty reserve tank.
The bet on the Ministry of Economy is that the funds enter by and no later than June 20th. This is the planned disbursement of USD 4,000 million and the frontloading of another USD 6,600 million in 2023. In the meantime there will be contact with China to extend the trade and the government’s fate will depend on the dollar not spiraling out of control, as threatened last week, and on containing the fall in dollar deposits.
The bottom He hasn’t given any signs yet and is still analyzing the latest measures taken to avoid another run after the inflation jump in April. The package called for a nominal rate hike to 97% and less intervention on financial dollars, without calming the market altogether. “The IMF issued a positive off-screen statement recently. The technical teams are working well and Around June 20, the IMF thing ends“, they claimed at Massa.
The situation remains extremely fragile. Despite the fact that the Central Bank has bought 326 million US dollars in the last 10 rounds of the foreign exchange market, gross reserves decreased by US$ 876 million, according to Inveq. While there have been debt payments, the main drain has been due to changes in swap valuations with China and gold, but mostly with interventions to support financial dollars.
The May photo proves it US$ 2,141 million of gross reserves have been lost and net reserves are negative by US$ 1,700 million, according to LCG. In this context Massa ordered a “run” on the BCRA market on Thursday, which triggered a jump of up to 10% in cash liquidation, which closed on Friday at $493. In Economics, they ensure that the intervention “will follow and every two by three they will lose money” whoever buys CCL or MEP at a “subsidised” price.
For now, the signals from Washington they don’t look encouraging. While they recognize the impact of drought, they see it they missed almost all the goals and Cristina Kirchner have once again denounced the “scandalous” loan of 44,000 million dollars to Macri in 2018. In turn, the number two of the IMF, Gita Gopinath, has identified Argentina among the countries with the highest inflationary “risk”. and warned “Even More Painful Actions” in emerging countries with insufficient monetary adjustments.
Indian economist starred in another lie traveling through Chile and Brazil last week, he avoided Argentina. From the Central Bank of Brasilia he presented his report on how to fight inflation in emerging countries. He was right in the midst of official pressure to intervene with IMF dollars and requests from the organization to “strengthen” the program with a larger increase in the exchange rate. Massa has already thrown himself “over the bomb”, as Cristina said and then repeated days ago, but both reject a devaluation on the eve of the Paso.
In a context of electoral uncertainty due to the lack of definitions in the Frente de Todos, the minister will continue his roadmap with a trip on May 30 to Beijing step up the use of the yuan to pay for Chinese imports. The minister plans to cover 5,000 million dollars with these funds between April and August – he has already authorized 1,700 million dollars -, thus avoiding a freeze in manufacturing sectors that are experiencing greater restrictions.
Instead, Leonardo Madcur and Gabriel Rubinstein will go to Washington in June, no date confirmed yet. It was scheduled for late April, but the currency rush postponed plans and the government opted, unsuccessfully, to add financial aid from Brazil. This point will be discussed again at the BRICS meeting at the end of May in Shanghai, also in China, where the President and the Minister of the Economy will intervene.
Then, the soybean dollar will have concluded without the expected results and inflation in May could approach double digitssomething unprecedented since it hit 10% a month in 2002. Without a doubt, the next 30 days will be thrilling.
Source: Clarin
