A UBA report reveals that the government has not achieved the targets agreed with the IMF

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According to an index prepared by the RA Center of the Faculty of Economics of the University of Buenos Aires, in this first review of the year by the International Monetary Fund on the objectives set in the agreement, Argentina has not achieved the agreed goals.

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“The qualitative conclusion of the report on Argentina’s goals in the agreement with the IMF frowns. On average, for the period under analysis, our country did not achieve the objectives of 43.91%”, reads the report.

The CENTRO RA Estudios para la Recuperación de Argentina has Radical deputy Emiliano Yacobitti as Prime Minister and produces various reports on economic issues.

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In this survey, the RA Center measures four parameters of the agreement with the IMF and establishes that only one has been respected, the one linked to the monetary issue, even if he warns of the negative effect of the increase in Leliq’s debt.

Set goal for first quarter a primary deficit of $441.5 billion (equivalent to 0.3% of projected GDP), as it piled up $689.928 million at the end of March 2023 (0.4% of GDP) based on official data.

As, the target was exceeded by a surplus of $248,428 million (remaining 56% above the proposed maximum).

Among the most relevant expenditure items, the ones that grew the most were capital expenditures (+176% annually; +37% real) and Other programs such as Progresar, Potenciar Trabajo, among others (+235%, + 66% real).

Instead, among the articles that have presented contractions, there are Family allowances that grow by only 15% per year (down 43% real year-over-year), Retirements 88% per annum (-7% real)Energy Contributions 11% per year (-45% real) and Transfers to the Provinces 63% per year (-19% real).

Moreover, the national government’s floating debt (difference between accrued and paid expenditure) amounts to 1% of GDP at the end of March, equal to 1.7 trillion dollars, while the agreement with the IMF provides for a maximum of 1.2 trillion dollars for the first quarter.

The second parameter is real income. The agreed goal is $2.6 trillion. In this indicator, the value achieved was $2.3 trillion. The goal was missed by $319,000 million (12% below the proposed minimum).

The third objective is related to the monetary issue. The agreed target is $139,300 million, while the actual issuance was $130,000 million.

The target was met by a margin of $9.3 billion (7% below the proposed maximum). In January and February, no direct transfers were made from the Central Bank to the National Treasury to finance expenditure. However, $130,000 million was transferred in March, being the only transfer that remained within the limits set by the IMF. As, “This is the only target of the deal that could be achieved in the quarter.”

The text underlines that “it should be remembered that this objective It only contemplates financing operations through Transitional Advances and Transfers of Profits”.

In practice, there are other operations through which the Central Bank can issue money with the intention of financing (directly or indirectly) the Treasury. Therefore, if interventions on the secondary debt market are also considered (to support the yield curve and therefore facilitate the placement of Treasury securities), the total issued during the first quarter of 2023 would have been equal to approximately 535,000 million dollars (0.3% of GDP).

“Naturally, The counterpart of this currency injection is the increase of the BCRA debt (Pases and Leliq) to the extent that the public rejects those issued pesos“.

The major violation occurs in the reserve port. Although an agreement was reached with the IMF in March to lower the original reserve accumulation target from $5.5 billion to $1.9 billion, the government failed to meet it.

At the end of the first quarter, “Accumulated cash reserves compared to December 2021 were -US$467 million (134% below the agreed minimum).”

In other words, reserves have been lost since the end of 2021, leading to a negative accumulation (loss). This results in “a goal violation of $2,547 million ($6,147 million over the original goal).”


Source: Clarin

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