The Minister of Economy, Luis Caputo, and the Secretary of Finance, Pablo Quirno, will travel to the Dominican Republic on Wednesday night to participate in the annual meeting of the Assembly of Governors of the Inter-American Development Bank (IDB) and the meeting of the board of directors and the annual meeting of the CAF – Development Bank of Latin America and the Caribbean.
The officials will participate on behalf of Argentina as a shareholder of the organizations, together with the ministers of finance, economy or the presidents of the central banks of the 48 member countries to discuss the topic development challenges and growth opportunities in the regionwhere the IDB is the main source of funding.
The agenda includes increasing the Bank’s support to the region, against a backdrop of growing social demands, limited fiscal space to meet those demands and the need to increase financing for the transition to green economies. The proposed capital increase and new funds for the company’s IDB Invest and IDB Lab subsidiaries will also be evaluated.
The IDB is chaired by Ilan Goldfajn, former Monetary Fund official and former head of the Central Bank of Brazil, who last week highlighted the changes implemented by Javier Milei’s government and anticipated that will send a mission to Argentina to make fiscal adjustment “sustainable”, in particular the cutting of subsidies and social spending.
Last December, Goldfajn met Milei in Buenos Aires, where he had gone to attend the president’s inauguration ceremony. In this context, the loans granted were discussed and the head of the BIS promised new disbursements, linked to the achievement of the objectives agreed with the IMF – which envisage a primary surplus of 2% of GDP in 2024 – and the advancement of the projects with the bank.
During the government of Alberto Fernández, during which the current Minister of the Interior, Guillermo Francos, was Argentina’s representative to the IDB, the body granted funds to carry out infrastructure works and strengthen reserves. Except for fast-track disbursements, IDB credits, like those of the World Bank, are subject to the progress of specific projects.
According to the organization’s data, credits approved for Argentina total 12,207 million dollars, including water and sanitation projects, transportation, state reform, urban housing, social investment, financial market, agriculture and healthcare. According to data from the Ministry of Economy, the central government’s gross debt to the IDB amounts to 16,459 million dollars.
Caputo’s team, however, excludes the possibility of advancing new credits to the organization as part of the Punta Cana summit: “In these cases, new financing will not be approved, but the political and governance agenda will be discussed.” of both institutions,” Economy sources said.
The trip will take place after Caputo met last week with IMF chief Kristalina Georgieva at the G20 in Brazil. There the official welcomed the adjustment measures, but recalled the need to generate “support” for the reforms. Previously, the Fund had sent a mission to the country and the government had shown interest in agreeing a new financial programme.
The IDB is one of the organizations that, together with the IMF and the World Bank, assists Argentina with financing aimed at improving tax compliance, rationalizing the tax system, cutting subsidies, “sustainability” of the pension system, coordination with the provinces and efficiency of state-owned companies, which the government seeks to privatize.
Caputo made progress on many of these items to achieve a financial surplus (more income than expenses after paying interest on the debt). In January, it reduced spending by liquidating items (mainly pensions) and stopping payments, including about $500 billion in energy subsidies to Cammesa, which puts the payment chain with generators and transporters at risk.
Source: Clarin
