This Thursday the Minister of Economy, Luis Caputo, and the Chief of Cabinet will meet two key men from the IMF for the Argentine case: Rodrigo Valdés, director of the Western Hemisphere Department, and Luis Cubeddu, responsible for the Argentine case.
The meeting of the two Argentine officials with the organization’s authorities – confirmed by sources from the Casa Rosada and the Ministry of Economy but not by the IMF – is not the first. Just over a month ago Caputo and Posse were in Washington to explain in person, first to the Treasury and then to the International Monetary Fund, the guidelines of Javier Milei’s plan. Days later, the agency praised the “decisive” and “bold” measures that followed Caputo’s recorded announcement that the dollar would rise to $800, cut subsidies, liberalize imports and bring the fiscal deficit to zero. Finally, in recent weeks the government has taken a new step by announcing a DNU and a bill with which it proposes to deregulate the economy.
All these measures and Government announcements will be presented this Thursday and labeled as a checklist in which Argentina has respected what Caputo and Posse have advanced in the United States.The technical teams of Economy and IMF, for their part, were working in parallel remotely.
The requests of the International Monetary Fund
Caputo’s announcements, plus the recently announced state reform regulations, are a sequence of priority actions (preventive action) which are nothing more than conditions and/or requirements that the organization requests in exchange for the release of a disbursement when a Country requests access to a part of an exceptional access program, that is, when it receives more money than its quota (this is what Argentina did in 2018 and ratified it again in 2022 when the organization lent 54,000 million of dollars).
Tomorrow the meeting between Argentine officials and those of the IMF will take place at the Ministry of Economy. “The idea is to revoke the fallen agreement and reach an agreement at staff level,” they say in Economía.
It is good to clarify that the negotiation is reached in the following way.
First, the last personnel agreement or understanding between the parties dates back to August 2023, immediately after STEP. That’s when the organization said the program with Argentina had “derailed.” Under the leadership of Sergio Massa as Minister of Economy, Argentina between January and June 2023 achieved only one objective of the six indicated by the program signed by the Fernández government itself. According to the organization, Argentina’s poor performance was a mix of events such as drought and Massa’s own decisions that increased the inflation rate, exchange rate gap and fiscal deficit.
Secondly, the Economy tries to reach an agreement to receive money. Last August, Massa managed to convince the agency to transfer the money orders for two reviews at the same time (the fifth and sixth). Now Caputo has the seventh ($3.4 billion). Although this money will “quickly go” to the minister: Argentina will have to pay the organization about 2.8 billion dollars in the January-February period.
A bit of history
The country has not reached the targets (July-September) requested by the IMF to grant 3.5 billion dollars. However, this would not be an obstacle for Caputo. Not only would the IMF grant Argentina a waiver (amnesty) for non-compliance, but it will assess as favorable the government’s commitment (ownership) to the program and that policies are in line with the objectives and goals. All this encourages the staff to make a positive evaluation and arrive at the meeting of the Board of Directors, which is the one that will approve the sending of the money, with the discussion already closed.
The Government confirmed yesterday that a delegation from the International Monetary Fund will arrive in Argentina tomorrow to “renegotiate the collapsed agreement” with the body “for failing to respect” the guidelines. Presidential spokesman Manuel Adorni indicated this. In Economy they have confirmed that they will be Valdés and Cubeddu.
The two officials of the organization are old Argentine acquaintances. Valdés was Chile’s economy minister under Michelle Bachelet and Cubeddu has worked at the Fund for decades and knows the country and the case well. Both had a difficult relationship with Caputo’s predecessor, Massa.
Economy sources explain that relations with the staff are satisfactory and they hope that the definitive agreement will be announced in January.
The Milei Government has decided for the moment to continue the program originally negotiated by former Economy Minister Martín Guzmán. The same program that Kirchnerism did not validate and which opened a political crisis within the government of Alberto Fernández and which ended with the resignation of the economist and his replacement with Sergio Massa (except for a brief period of Silvina Batakis).
Kirchnerism, unlike Milei, when it took office in 2019 decided not to put on track the program with the IMF that Mauricio Macri’s government had signed (and which Caputo then partially implemented and also discussed with the then staff ) and transformed the standby by replacing it with an Extended Facilities agreement.
Source: Clarin
