The Minister of Economy, Luis Caputo, will meet again with the authorities of the Monetary Fund during the spring meetings of the Organization and the World Bank. The official, his finance secretary, Pablo Quirno, and the head of the Central Bank, Santiago Bausili, They will travel to Washington this Tuesday, where they should resume negotiations with Kristalina Georgieva’s team, such as Caputo was congratulated yesterday on being re-elected head of the IMF.
The government remains look for dollars to abandon shares, which is why it is negotiating with multilateral organizations, banks and foreign funds, without yet concrete signals. In recent weeks there have been meetings with members of the CAF and the IBRD, a World Bank body, according to what has been learned Clarion. And the Fund praised the “impressive progress” more than a week ago, but persisted “firm” measures and improve the “quality of fiscal adjustment”, which implies advancing lasting reforms.
Although the Central Bank accumulated more than 13,000 million dollars in reserves after the change of management and getting closer to the goal, it was able to do so thanks to the restrictions that we are now trying to eliminate. To do this, the President said he needed a buffer of 15,000 million dollars, a goal still far away as Caputo will have to cancel at the end of the month the payments for almost 1.9 billion dollars postponed last week with the Fund and from Monday the BCRA it will free up another share from paying for imports.
Negotiations with the United States and Georgieva are also essential to release funds from their financial “arms”. Javier Milei met with the head of the IDB, Ilan Goldfajn, in Miami last Thursday to assess the “technical support” for cutting subsidies and the “efficiency” of social spending. Caputo seeks to resume these talks and maintain other contacts in Washington in the framework of the finance ministers’ summit to be held between Wednesday and Friday.
The last time the minister met with the head of the Fund was in February, as part of the G20 summit in Brazil. The Bulgarian economist supported the adjustment plan, but reiterated itneeds support for reforms and strengthened the requests made a week earlier by number 2, Gita Gopinath, who during a mission in the country asked for a Earnings reform, changes in the pension formula and a stop todollarisation.
The Government has sent some signals in recent weeks. On the one hand, the new draft law on the bases was released, together with the package with which we try to recompose the collection and strengthen fiscal adjustment. The combo provides for an increase in profits for workers and an increase in the monotax, accompanied by relief for businesses with the reform of personal assets, tax moratorium and anti-money laundering.
Instead, a new pension plan was made official, which lost almost 40% of its purchasing power in the first quarter. AND made inventories more flexible by reducing the payment deadline for imports to 30 days for SMEs (instead of the staggered 30, 60, 90 and 120 days) and authorize the advance payment of 20% for the purchase of capital goods, amidst the shutdown of factories and the decline in activity, as is happening in Acindar
Meanwhile Caputo continues ignoring the Fund’s requests to accelerate the devaluation of the dollar and raise rates. The “stretched” dollar acts as an anchor to curb inflation, which fell to 11% in March due to the collapse in demand. And rate cuts, like the one applied again Thursday by the BCRA, are critical to continuing to liquefy the Central Bank’s quasi-fiscal debt and peso savings.
The government can do this because it maintains supplies, although both measures carry risks. He was the former Minister of Economy, Domingo Cavallo, who advised against rising stocks and unifying the foreign exchange market mid-year given the difficulty of lowering inflation more quickly, he therefore proposed that it is first necessary to accelerate the official exchange rate and formalize the exchange rate splitting, a measure Milei described as “stupid.”
Source: Clarin
