Claudio Loser said the change of interlocutor with the IMF will take time to adapt.
One of the most important challenges for the new Minister of Economy, Silvia Batakis, is the continuation of talks with the International Monetary Fund on the implementation of the Extended Facilities program approved in April and which is already emerging with serious difficulties of realization as it was planned.
Added to this was the departure of Martín Guzmán, who had negotiated the deal in detail from the start great uncertainty in Washington on the progress of the program, especially since Batakis is linked to the sector of the Frente de Todos it has strongly criticized the agreement with the organism and some objectives that it establishes.
Claudio Loser, said the former IMF director for the western hemisphere and that he has led several negotiations with several countries in the region Clarione which, for the Fund, Batakis is a stranger and that he tries “desperately” to know what his profile will be. He believes there will be a lot of tension in the beginning, even if he says so the organism can be flexible.
“But if he comes with a totally Kirchnerist program, things won’t go on” and he may face “very serious problems”. “You’re hitting an important wall,” she warned.
-How do you see the arrival of Batakis in Economy? How do you think the Fund values it?
-Batakis is internationally unknown. As far as I know, he didn’t have any kind of international presence, although he studied abroad. He had a very internal trajectory, in relation to the provinces, and in the province of Buenos Aires. I have no impression, I don’t know what his macroeconomics is like. He said a few things. Controlling the fiscal deficit is fine, but saying that the exchange rate is fine when it lags behind doesn’t help. The Fund will try desperately to see his profile. However, the Argentine representative before the IMF, Sergio Chodos, remains and is an important channel that is maintained and that will help to continue or restore the dialogue.
– It is related to Kirchnerism, which criticized the agreement with the Fund. Do you think the negotiations with the institution will be complicated?
-It can complicate the relationship if it comes with the Kirchnerist opinion that emissions must be increased or with the President’s opinion that we are growing so much and that is why we need to have more imports and that we need to increase demand. I think there will be very serious problems if that happens. I think the Fund will be willing to give space for the last few months that there have been deviations and for the next revision maybe it can give a waiver (sorry), but if they come with a totally Kirchnerist program things won’t go on, I don’t know if they explode, but they won’t go on. The Fund will not allow for an expansive program as Kirchnerism wants at this time. Expansive from a fiscal point of view and with more monetary issuance without raising the rate, because this is the problem that Argentina has, with high inflation and a backward exchange rate and with many restrictions and new traps.
– Would the program crash if so?
-It’s possible. There is a negotiation, we need to see how much the Fund can loosen. I hope not too much because there is a lot of frustration with Argentina among the Fund’s shareholders. Ilan Goldfajn (head of the organization’s Western Hemisphere), who holds the position I had, has a fairly orthodox, albeit flexible, view. So they will negotiate very hard and I see two possibilities: one is that there is some flexibility, but ask that the subsidy part and the tax part work; Another is that the government says it does not want to and the relationship with the Fund is cut off. But the latter would lead to a major explosion or implosion of the economy.
Do you believe that the annual goals set by the program will be achieved?
– Some space will be given to the numbers, with the question of oil and gas, with which inflation was higher. Something can change the numbers, but not change the program. In my experience, it can happen, I think in the past of Argentina, Brazil or Mexico, but within certain limits.
Do you think there will be a waiver for the next step?
-The next revision, in September, looks at the numbers until June. There may be a waiver in the numerical part, as long as an agreement is reached. They will have to negotiate very intensively to re-establish the relationship with the Fund, I have no doubts about that.
– Given your experience, how much does the negotiation with the change of interlocutor suffer?
-The Fund is used to changing interlocutors. I lived it with Argentina, Mexico, Panama, Brazil. The problem is that there is always an initial shock. In the beginning, what you do is fight because there is no understanding of the language that will be used, and I am not referring to Spanish or English, but to the kind of things where there are always misunderstandings. The first contact is always very intense, even with the authorities with whom one could reasonably dialogue. There is a lot of tension, but after a week it ends up being fixed and they start negotiating seriously. Although the Fund’s technical team is used to Guzmán, they will adapt to the new circumstances of this psychological adjustment process. But if he is very Kirchnerist, very much of the Patria Institute, there will be problems. You are about to face a very important wall.
Paola Lugone
Source: Clarin
