The government resorted to an accounting trick to achieve a key goal with the IMF

When the market began to fluctuate on the possibility of a default in the program with the IMF, the government again resorted to an accounting trick to avoid one of the objectives agreed with the organization.

The operation made it possible to maintain the monetary issue within the established limit of the second quarter and qualified to new transfer of $ 124,000 million from the Central Bank to the Treasury to cover expenses.

At the end of May, the Ministry of Economy sold dollars (SDRs) to the Central Bank in exchange for pesos. With these resources, Martín Guzmán’s team canceled transitional advances of $ 322.5 billion with the entity – a kind of loan that must be repaid in 4 to 6 months – and renewed the limit available to be financed in this waya mechanism it used in September last year to expand monetary assistance.

Strictly speaking, the use of DSPs for this purpose is foreseen in the program, but among analysts it was surprising that he used them in the first half. “According to my calculations they would have started using them in the second half, but from the dynamics of subsidies seems a little early. Surprisingly, she doesn’t have muchor, in the technical note it is clarified that they will be used as “budget support”, explained the economist Leandro Zicarelli.

According to the consultancy LCG, up to May 30 the transfer of transitional advances to the Treasury amounted to 380.5 billion dollars, which he was approaching the limit of the June milestone ($ 438.5 billion). On May 31, the Treasury canceled part of these advances with some of the SDRs transferred from the IMF in March ($ 322.5 billion) and the net financing through advances was reduced to $ 58 billion.

Guzmán promised to reduce the deficit and finance it with fewer monetary issues (1%). However, since April the picture has started to get complicated, which has led him to use DSPs.

“The accounting maneuver used to cancel part of the Temporary Advances at the end of May guarantees compliance with at least one of the objectives set for the month of June and reduces the pressure on the Ministry of Finance regarding the results of the month of June, “he said LCG.

In that picture, Last Thursday the Treasury requested a draft of 124,000 million dollarswhich brought the total amount of advances transferred to $ 182 billion.

The aid came in a busy month in tax matters and, according to official sources, it will cover the payment of salaries (Christmas bonuses and pensions are also added) in between a bump “ two weeks between the last auction and next Tuesday, with no financing from bond investors.

Government encountered difficulties sustain high levels of debt placement in pesos. Since March, the additional funding has been reduced by 30%. Like this, doubts grow on its ability to finance public accounts and renew deadlines as the elections approach next year, a climate that would have motivated him the drop of up to 10% recorded this Wednesday by bonds in pesos.

On the fiscal front, although funding grew 80% yoy in May, April accounts showed that part of the revenue growth was explained by the 1,000% jump in property income due to an alleged gain in issue of CER bonds. A “creative” accounting that can no longer be used in the future for the calculation of the fiscal target (2.5% of GDP) and will make it difficult to reach it in May and June, as warned Delphi.

Amid these limitations, Guzmán sent Congress this Wednesday the luck project add $ 120 billion in resources in 2023.

B “The most relevant factor behind this dynamic is configured by a very expansive fiscal policy that prevents the Treasury from reducing financial needs: higher spending leads to higher financial needs and this is where the goal of issuing money comes into tensiontaria, “he said. santiago manukianfrom Ecolatin.

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