(From Washington) The meeting between Alberto Fernández and Joseph Biden shows its results: the Inter-American Development Bank (IDB) and the World Bank (WB) will squeeze their resources and oil their bureaucracies to allow the Central Bank’s reserves to strengthen in the coming months. The government needs to meet the goals agreed with the International Monetary Fund (IMF) and the severe drought in recent months wreaked havoc on the forecast for public revenue, which could recover volume with the lines of credit that the IDB and the World Bank will grant to the Peronist administration.
The institutional decision and the subsequent public announcement of the IDB and WB credits have a political context that exhibits the consequences of the conclave of Alberto Fernandez and Biden. The United States manages the board from the Inter-American Development Bank and the World Bank, and a simple signal from the White House can speed up time and find new financial resources.
The IDB and the World Bank already had a road map with Argentina, but the smiling photo of the Democratic leader together with the head of state worked as an accelerator of what had already been granted and creates scenarios to find multilateral funds where only bureaucratic equations and geopolitical resistance existed.
However, it is not a linear process and the inmates of the palace play a key role. Before the arrival of Sergio Massa at the Palacio de HaciendaMauricio Claver-Carone -at that time head of the IDB- stepped on Argentina’s credits. Massa loosened Claver-Carone who had an infinite bid with Alberto Fernández, and the credits were released.
And in recent days, another silent negotiation took place in the building that the IDB occupies at 1,300 New York Avenue in Washington. Argentina wanted to occupy a vice presidency of the Inter-American Development Bank, but Illan Goldfajn -its president- let the government know that it had other plans for that key position in the regional organization.
Reluctantly, the Pink House accepted Goldfjan’s logic. And in exchange, he demanded extra funds destined to strengthen the reserves of the Central Bank. The head of the IDB validated the trade offwhich will pass smoothly through the board from the credit institution controls USA.
At the World Bank, the institutional situation is different. Your president David Malpass – a Republican hawk appointed by Donald Trump – decided to resign, and in his place Biden appointed Ajay Bangaan Indian businessman who understands the weight of climate change on the global economy.
The economic crisis in Argentina and its need for extra income cannot wait for Banga to take office and implement the profound reform of the World Bank that Biden announced to Alberto Fernández. Then, the WB board will try to speed up all the bureaucratic deadlines to comply with the political announcement made by the Democratic leader before his Peronist colleague.
There is still no certainty regarding the possibility of obtaining extraordinary items from the World Bank -as it will happen with the IDB-, but Minister Massa already knows that the board of directors of this multilateral organization will approve two new projects for 600 million dollars towards the end of April linked to climate change and to improve energy efficiency in the most humble homes in the country.
Biden’s support for the Government begins to take shape with the political decision of multilateral organizations to add extra items or accelerate the granting of credits that were already agreed upon since the beginning of 2023. But that support does not end at the IDB and the World Bank: Biden promised build a bridge that allows the country to cross from this complex financial crisis to a path of sustainable growth in the coming years.
A sample of this geopolitical construction will take place when the Undersecretary of State, Wendy Sherman, meets with Foreign Minister Santiago Cafiero in Buenos Aires, before the end of this week. In this meeting, Cafiero will try to open the United States market to the regional economies, while Sherman will try to confirm that all of China’s strategic projects in Argentina were frozen.
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