The entourage of the Ministry of Economyheaded by the deputy minister gabriel rubinstein, left Monday night for Washington to close the fine print of the remodeling of the Agreement with the International Monetary Fund for the repayment of the external debt. Even with issues in tension, with the trip will finish a novel that began three months agoafter putting on the table the impact that the dry drought has on the country’s fiscal accounts, but which times were extended above the loanable terms.
Sources from the Palacio de Hacienda confirmed to PROFILE that Rubinstein, accompanied by the Ministry’s Chief Adviser, leonardo maduroand the second vice president of the Central Bank, Lisandro Clerileft Ezeiza for the US capital to draw up the details of an understanding to be signed by Minister Sergio Massa and IMF Managing Director Kristalina Georgievaand then be approved by the Board of Directors of the multilateral credit organization.
The calm before the storm? Notice that inflation could return to 8% per month
The backing of board must be achieved in record timebecause Argentina will have to deal with payments for USD3.500 millioncorresponding to maturities for USD2.700 million that were unified by July 31, and interest for about USD800 million for the first day of August. That day, the IMF goes into recess, which would force the country to pay its obligations with yuan so as not to fall into arrears and complicate the financial situation. That is why the entourage left Buenos Aires without the agreement fully resolvedas Massa would have liked.
A long negotiation of three months
The head of the Palace of Finance resist as much as possible the pressures of the IMF to reach the State accounts, still in full electoral campaign. In the economic team there is “disappointment” about the negotiations with the staff of the Fund before the “inflexibility” around “political needs” that may have been activated as an argument to allow exceptions to recalibrate the goals of the original debt repayment agreement. By June, none of the goals had been met, a situation that was accepted due to the effect of the drought.
In the IMF there was a strong expectation that Massa would be the candidate of the ruling party, to give the agreement predictability and thus prevent it from becoming a dead letter shortly after it was drafted. It happens that, since his assumption, the minister reduced fiscal spending and activated tools to add dollars to the reserves of the Central Bank, especially through the dollar-soybean for agricultural exports. Today, the option of a fourth edition has low firepower.
Argentine bonds rebounded after the opposition victory in Santa Fe
The stretching of the negotiations put the markets on alarm and some analysts had tied the rise of the dollar blue to the uncertainty of the agreement. This Monday, and after the victory of Together for Change in Santa Fe, the markets turned positive again and the exchange rate gap remained stable, below 80%. The news of an agreement added to the climate of calm which, if complicated, promised to cast a shadow over Massa’s plan to contain inflation, after the 6% in June reported by INDEC.
Maturities, interest and a dialogue against the clock
Argentina hopes that the Fund will send you some USD2,500 million of extra funds to the USD4,000 million that were stipulated, after the June review. Although initial expectations pointed to USD10.4 billion for all of 2023 and even some USD2 billion more next year, the agency’s demands were high for campaign fines. Today, the original compliance, plus an extra that allows the Government to overcome pre-electoral dollarization tensions, are welcome on the fifth floor of the Palacio de Hacienda.
The minister and presidential candidate of Union por la Patria must face the Devaluation and greater fiscal adjustment claimsif you would like to receive the go-ahead before August. The resistance to increase the price of the dollar against the peso was successful, from the inflationary results, which promised to affect more and more the income of the population. But the requirement to further adjust the deficit, to bring it to 1.5%, is a discussion that is still open. The entourage takes the mission to sustain, at least, the 1.9% signed so far.
Cafiero and his Mercosur peers stood out with representatives of the EU to advance the agreement
To bring positions closer, which were stagnant in the last week, is that Massa spoke personally with Georgieva during the weekend. There she was engaged “goodwill” from both sides to get to the UN agreement without the need to “hold hostage” officials who traveled to the United States. The minister has not yet defined if his signature will be done in person or if he will do it via zoom. sure, of Vice President Cristina Kirchner is aware of all the negotiationswith whom he shared a act of management and campaign, which corresponds more as political endorsement than electoral.
AM / DE