Everything is on the table in the discussion with the Fund, absolutely everything. And there is also an issue that is central to us, which is the intervention capacity of the Central Bank (BCRA), which cannot be waived.”
Sergio Massa, Minister of Economy
The Minister of Economy, Sergio Massa, pointed out on Tuesday that the drought will subtract from the Argentine economy between 15,000 and 18,000 million dollars this year and that the International Monetary Fund (IMF) understood it as a “game changer”, for which all the variables are renegotiated without leaving the agreement.
Agricultural exports were budgeted at 42,000 million and will end between 24,000 million and 27,000 million dollars (which implies a drop of, between 36 and 43%), Massa explained in a meeting organized by the Chamber of Commerce of the United States ( AmCham) in Argentina.
The Tigrense pointed out that given the shortage of dollars in international reserves, the use of currency swaps with China was enabled for the equivalent of about 5,000 million dollars, which can be used in yuan to pay for imports until August.
Some 1.41 billion dollars were already used in April, mainly with large companies, while SMEs are now accessing the Import System of the Argentine Republic (SIRA) with yuan. “The authorizations come out in 24 hours,” they confirmed in the private sector.
Eventually, the swap could be extended up to 19,000 million dollars, depending on the political conditions (basically, the geopolitical strategy of China and Argentina to substitute a part of the dollars as foreign trade currency in the middle of the negotiation with the IMF).
$5 billion of the swap will be used through August. It could then be expanded to the equivalent of 19,000 million dollars, depending on political conditions. The management of energy purchases, he said, allowed an annual saving of imports of liquefied gas for 1,900 million dollars.
In this way, the official responded to a question about net reserves from his interviewer, Facundo Gómez Minujín, president of JP Morgan Argentina.
Regarding the negotiation with the IMF, the minister indicated: “Once we finish the operations that link trade flows, we will look at how to design the eventual disbursements or reimbursements in the Fund’s program, beyond the fact that we are already discussing objectives and goals”.
A source from the trade union sector, who heard him at a previous meeting, stated that the Fund wants to make sure that the Special Drawing Rights (SDRs) that it can advance, for some 10.800 million dollars, return to its coffers next year.
For that – he commented – Massa is confident that the field will have a good harvest in the 2023/2024 campaign and that after next summer Argentina will have the money to repay the maturities of the original credit taken in 2018 by the government of Mauricio Macri. This trade unionist believes that exchange controls will have to be reinforced before opting for a devaluation.
