. (Photo by NICHOLAS KAMM / AFP)
The International Monetary Fund approved on Monday the second revision of the program with the agency, which will allow the release of approximately 3,900 US dollars million for Argentina when the board of directors gives him the green light. The announcement was made shortly before the meeting of the managing director Kristalina Georgieva with the president Alberto Fernández in New York, who receives good and expected news from this city which will serve to temporarily lighten the coffers of the Central.
The photo between Georgieva and Fernández will seal the work of the Fund technicians, led by Luis Cubeddu, and those of Economics, led by the advisor Leonardo Madcur, who for several weeks had been working on the Zoom staff contract and also face to face with the last days in Washington with Minister Sergio Massa.
According to Communications Director Gerry Rice, the axis I could treat it in 2-4 weeks. It is estimated that it will go smoothly because it has the support of the United States, the Fund’s majority partner.
The announcement and the meeting with Georgieva in the framework of the United Nations General Assembly gives a boost to the tour of President Fernández, who will be giving a speech to global leaders on Tuesday, but came with an agenda without too many major bilaterals.
In a statement, the Fund said that “recent and decisive political measures aimed at correcting previous setbacks they are helping to restore trust and strengthen macroeconomic stability, including by rebuilding international reserves “.
He added that “the technical staff of the IMF and the Argentine authorities have agreed that the objectives set in the approval of the agreement will remain unchanged until 2023 “which suggests that perhaps next year they may have changed.
“Strong policy implementation remains essential to consolidate macroeconomic stability and start addressing Argentina’s deep-rooted challenges, particularly high and persistent inflation,” he added.
This was stated by the Fund “Most of the objectives of the quantitative program until the end of June 2022 have been achieved, with the exception of the minimum threshold for net international reserves, mainly due to higher than expected growth in the volume of imports and delays in official external support. Subsequently, a period of volatility on the currency and bond markets was interrupted after decisive interventions that corrected the previous setbacks and rebuilt credibility ”.
As for the macroeconomic picture, he said so “Reflects a more difficult global environment (continuous inflationary pressures, tightening of financial conditions and slowdown in growth) and recent pressures on domestic markets ”. They noted that thanks to the measures of the new economic team, “market pressures are dissipating and growth prospects remain unchanged. 4 percent for this year, before moderating the potential rate 2 percent from 2023 “.
“Although inflationary pressures remain strong, with consequent upward revisions of inflation forecasts, a gradual moderation is expected in the remainder of 2022 and 2023, reflecting a combination of tighter macroeconomic policy frameworks, reduced uncertainties due to sustained program implementation and projections on price developments world of raw materials.
On the fiscal front, the IMF says so the primary deficit target of 2.5% of GDP in 2022 and 1.9% of GDP in 2023 was ratified. And he stresses that improvements in public finances are based on cuts (he calls it “better targeting”) in subsidies for energy, water and transport; a new definition of spending priorities to ensure the execution of critical investment projects and adequate protection of poor families; the strengthening of expenditure controls, which in turn should help to contain expenditure arrears; and efforts to review corporate tax incentives and strengthen revenue compliance.
Regarding monetary policy, he said that “the Central Bank is committed to the continued and more coherent implementation of the monetary policy framework, which is already generating positive real interest rates. This is necessary to strengthen demand for assets by weight, reduce external pressures and sustain a sustained and high inflation reduction, also supported by a continued reduction in the monetary financing of the fiscal deficit, which will be limited to 0.8 per cent of the GDP this year (below the 1% of GDP target) and will be limited to 0.6% of GDP in 2023 “.
On reserves, he said that “the more decisive implementation of stricter macroeconomic policies should support a strengthening of the current account balance, external competitiveness and reserve coverage. In line with the program commitments, Net international reserves are expected to increase by $ 9.8 billion over the course of 2022-23 “.
With regard to structural reforms, The IMF stresses that “measures are being taken to strengthen the pesos debt market, the transmission of monetary policy, the management of public finances and the structures to combat tax evasion and money laundering, complemented with the efforts of the authorities. to seek international agreements for the exchange of information. Well-designed incentives to encourage investment and export potential from strategic sectors, especially energy, remain crucial. “
LMost of what is disbursed after board approval will go back to the Fund. The timing is urgent for Argentina because on Wednesday there is a deadline of 2,800 million dollars with the agency and given the administrative bureaucracy, the 3,900 approved today will arrive only in a few weeks.
In the same way, the Central will pay with its reserves because it already has the certainty that the money will arrive. In the coffers there is now the money from the liquidation of the soybean and the Special Drawing Rights (SDR) that the Fund transferred to all countries a few months ago.
The package was finalized in recent days, after the visit of Minister Sergio Massa and his team to Washington. After meeting with the Argentine official, Georgieva said the review would be completed “in the next few days”. Although Argentine officials have consistently emphasized a commitment to the program’s goals, which include a primary deficit of 2.5% and $ 5.8 billion in reserves by the end of the year, experts doubt they can be achieved.
Paola Lugone
Source: Clarin
