He International Monetary Fund (IMF) He assured that they are “evaluating the measures” announced by the Ministry of Economy and remarked that negotiations are advancing “to strengthen the Central Bank’s reserves.”
“Discussions include strengthening reserves. We are evaluating the measures. At this time, we continue to discuss ways to strengthen the program and safeguard stability in the face of severe drought.“, the IMF said through a spokesman.
In that sense, he added: “As we said before, this includes policies to improve fiscal sustainability and strengthen reserves, both essential to reduce inflation, while protecting the most vulnerable.”
Massa aims to rethink the program with the IMF
The Argentine government is advancing with the negotiations with the IMF to reconsider the entire current program with the multilateral organization, to which it added the explicit diplomatic support of Brazil to achieve this task.
Both on the side of the IMF and the Argentine Government affirmed that they are working on the reconsideration of a new program, with the effects of the phenomenal drought that affected the country as a trigger for the negotiations.
Days ago, President Alberto Fernández said that “we are working with the Fund and we are renegotiating“.
Sergio Massa had advanced that in the discussions that are carried out with the IMF “everything is on the table”
The head of state recalled that “it is the first time” that a renegotiation of this type has been opened, the product of a “clause” included at his request at the time of the agreement, and linked to the consequences that “world conflicts” could bring.
“We do it because When we signed the agreement we put a clause that said that if the Argentine economy was subjected to any stress situation due to global or environmental conflicts, the terms had to be reviewed“, the President expanded.
Fernández added: “We applied that clause because at that time we were not sure how the pandemic would affect it and then the drought came.”
What established the program with the IMF
According to the program established with the Fund, for the remainder of the year there are planned disbursements of US$10,460 million.
For this to happen, the program agreed in March of last year establishes that Argentina must meet the goals set for the period and that disbursements will be made in three tranches: the months of June, September and December..
The Government, for its part, seeks to reform this program, whose objectives became more difficult to meet due to the impact of the drought on the external accounts, and to achieve an advance of that disbursement of US$10,640 millionwith the aim of calming expectations and strengthening the reserves of the Central Bank in the middle of the electoral year.
According to the program established with the Fund, for the remainder of the year there are planned disbursements of US$10,460 million.
The market speculates that there will be a new adjustment to the reserves goal, and eventually new objectives in the fiscal field, among other points.
Previously, the Minister of Economy, Sergio Massa, had advanced that in the discussions that are carried out with the IMF “everything is on the table in the discussion, absolutely everything. And, in addition, there is a question that is central to us, which is the Bank’s capacity for intervention Central, which is inalienable”.
Massa said this last week at the closing of a conference organized by the United States Chamber of Commerce in Argentina (Amcham).
The impact of the drought, which will imply a loss of about $20 billion this year -according to the minister-, it implied a “game change” in the scenario that was envisioned at the end of 2022, and it is the central point in the framework of the discussions that the Government maintains with the organization to reformulate the schedule of disbursements and modify the targets agreed in March 2002.
Meanwhile, the Government added support from Brazil to rethink the program with the Fund. The Brazilian Economy Minister, Fernando Haddad, told the United States Secretary of the Treasury, Janet Yellen, during the meeting he held last Thursday in the framework of the G7 summit held in Japan, his concern about the economic situation facing Argentina, and maintained that the solution involves a renegotiation with the IMF that must be supported by Washington.
