The International Monetary Fund (IMF) approved the goals for the fourth quarter of 2022 of the extended facilities program that it is carrying out with Argentina and, consequently, entered the long-awaited disbursement of US$5 into the Central Bank (BCRA) reserves. 400 million (SDR 4 billion). This puts the total disbursements under the agreement at around US$28.9 billion.
In this way, the reserves of the monetary and financial regulator increased in the day by US$2,492 million, compared to US$36,563 million at the close of Thursday, as a net effect after the payment and closed at US$39. 055 million the month. Likewise, the flexibility of the reserve goal by the Fund was approved in view of the difficulty of accumulating dollars that Argentina is facing in the context of the drought.
Yesterday the BCRA sold again strongly, losing some US$99 million on the wheel and closing March with a loss of US$1,918 million (see page 7). This responds to the fact that, throughout the third month of the year, there were extra demands for bond payments from Santa Fe (US$130 million) and Mendoza (US$57 million), and imports of gas vessels (US$262 million). , among others.
Although they have not yet been officially communicated, the disbursement order has already impacted the accounts of the Central Bank. In addition, it is expected that in the next few hours the Fund’s board of directors will formalize the modification in the reserve goal as a result of the drought and after the request of the Minister of Economy, Sergio Massa.
“Although more solid macroeconomic policies and efforts to ensure reserve coverage and reverse recent foreign exchange losses are expected, a modification of the net international reserve accumulation target for 2023 is requested, they had expressed from the IMF technical team.
They added: “This will partially accommodate the severe impact of the drought, while taking into account the offsetting effects of lower energy import prices and agreed policy measures. Most of this accommodation is requested to be done by early 2023, consistent with the anticipated impact of the drought.”
On the other hand, the economic entity discussed the fourth technical review of goals, within the framework of a new program for Ukraine. The staff analyzed whether the Government complied with the accumulation of foreign currency, the primary deficit and the monetary issue ceiling to finance the Treasury at the end of the fourth quarter of 2022. In all aspects, it was approved and the disbursement proceeded.
The news of the disbursement comes after several negotiations by Minister Massa, who held a meeting with the number two of the IMF, Gita Gopinath. There they discussed the need to make the reserve target more flexible and, on the other hand, Massa promised to take measures to increase the accumulation of dollars in the BCRA.
That discussion, however, was expected to be less compromising. It happens that the debate of the board of directors, in addition to including the check of conditional objectives of the agreement -under which the disbursements are approved or blocked- also seeks to determine if the course of the policy of a Government that has a current financial program is the correct one. and what actions it should take or discourage. The drought and its impact on the macroeconomy was the central theme of the round trip between Buenos Aires and Washington in recent months. Without going any further, it does not appear as a completely settled discussion.
In fact, from Washington he announced the launch of the soybean dollar 3 and the agricultural dollar, which includes, in addition to soybeans, other products from the regional economies and promised to obtain, during the year, around US$3,000 million International organizations.
Last Wednesday, while President Alberto Fernández met with his American counterpart, Joe Biden, Massa did the same with the first deputy managing director of the International Monetary Fund (IMF), Gita Gopinath. In the last talks, the focus was on the impact of the drought, internal financing and the level of reserves. These are aspects closely related to the fulfillment of the goals of the current program with the organization.
Gopinath herself was in charge of advancing these points after describing the meeting with Massa as good. Along these lines, she detailed: “Good meeting with Minister Sergio Massa. The fourth review of the program, the severe impact of the drought and the importance of actions to increase reserves and continue mobilizing internal financing in a sustainable manner were discussed.”
Fully focused on the accumulation of reserves, the head of the Palacio de Hacienda announced from Washington the launch of a new “soybean dollar” (officially “agro dollar”), which from April will have the objective of increasing the liquidations of cereal producers , increase the income of dollars and improve the fiscal accounts of the country.
For the economist Christian Buteler, “the dollars from the IMF arrived and managed to turn around the monthly result of the reserves.” And it is that this news modifies the panorama that the BCRA had until today in the afternoon, after having lost more than US$1,900 million in the official exchange market throughout March.
The drought and its impact on the macroeconomy was the central issue of the negotiation
The turn of the IMF disbursement has already impacted the reserves of the Central Bank
