The electoral campaign of Sergio Massa It will depend, to a large extent, on the outcome of the meeting that will be held next week in Washington by a contingent of the team from the Economy portfolio with technicians from the International Monetary Fund (IMF). The objective of the mission is to achieve a renegotiation of the Extended Facilities Program (EFF) that it maintains in force with the credit agency and an advance of about 10,000 million dollars to relieve reserves.
The mission will be led by the Vice Minister of Economy, gabriel rubinsteinand the chief of advisers, Leonardo Madcur. It is not ruled out that they join Lisandro Cleriby the Central Bank, and Marco Lavagna, in charge of the INDEC. For now, the negotiations seem to be advancing from strength to strength and the good thing is that from the IMF they recognize that Argentina keeps up with its financial obligations.
In fact, yesterday the Government paid the maturities scheduled for June without using a single dollar and with own resources. It is 2,700 million dollars that were canceled with special drawing rights (SDRs) and yuan. The debt is part of the 45,000 million dollars of the credit requested in 2018 during the management of Mauricio Macri.
It is the first time that Argentina uses the Chinese currency to pay the IMF. The yuan with which the June expiration was canceled comes from the currency swap, a bilateral contract that allows risk exposure with China to be hedged. This cushion allows to attenuate the shortage of reserves of the Central Bank.
Fulfillment of the goals gives rise to disbursements from the multilateral organization that allow Argentina to pay the agreed quotas in a timely manner. Massa is excited that the Fund advances more than the 4,000 million dollars that would correspond to it for the July quota, but he would be looking for the advances that it should receive until the end of the year, almost 10,000 million to relieve reserves.
The agreement that is now intended to be renegotiated was sealed last year by the president Alberto Fernandezincludes quarterly reviews on the level of compliance with goals in terms of fiscal discipline, accumulation of monetary reserves and limits on monetary issue.
There are several arguments used by the Government to renegotiate, such as the complex scenario of the world economy as a result of the Russian invasion of Ukraine or the severe drought suffered by the country and which had a full impact on the agricultural sector. Both points would have exacerbated the strong fiscal imbalances and the shortage of dollars, which ended up making it difficult to meet the goals for the first and second quarters of this year.
Opening the umbrella, on the 22nd the Government activated the “payment process” of 1,900 million dollars to the IMF, which correspond to a new maturity for the loan. Massa said this week that he is working towards an understanding with the IMF on the goals that the country must meet in the first half of the year and the program for “the next six months”.
What the IMF says
The Executive Board of the IMF held last Thursday a “routine informal meeting” on Argentina, the technical discussions revolved “on a package of policies to safeguard economic stability, in the context of a challenging situation, partly affected by the historical drought”as reported by the agency itself.
The negotiation is focused on “strengthen macroeconomic policies to support reserve accumulation” and in “improve fiscal sustainability”while protecting the most vulnerable, detailed the IMF.
An advance, works and campaign
Massa assured last Tuesday, during an act organized by the Chamber of Construction (Camarco), that technical negotiations were in their final stage. “We are finishing the semester, or the two quarters, with the Fund, I left the team working. In the next few hours it will be publicly known what the program is like for the next six months “advanced the minister.
In the same forum he clarified: “I have to try to be aseptic when looking at this issue so that the electoral process does not cloud the stabilization of the accounts of the Argentine economy, which play an important role and obviously the flow of intermediate goods that we need to carry out works”.
In the government they hope that fresh funds finally arrive in mid-Julydue to the process that takes about two weeks, a period in which the staff submits the report to the members of the Board of Directors and then goes on to its discussion and final approval.
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