At the limit of the expiration of 3,400 million dollars next week, Sergio Massa announced an agreement with the IMF that avoids falling into a cessation of payments, with the consequent effect that it could have on the financial market and the price of the dollar at primary election days.
“San Juan brings luck. In a few minutes the Fund will publish the Staff Level Agreement, which is the conclusion of the technical work that we had anticipated on Sunday and somehow allows us to go through this second part of the year with much more calm. For us it is very good news,” said the head of the Palacio de Hacienda.
“What is defined is a program of objectives and goals, balance in public accounts. A program of accumulation of reserves, in this sense, lowering withholdings is a welcome measure. Trying to better manage the importation of luxury goods is also part of the objectives and goals,” he added.
According to what was stated by the minister, the Fund will disburse some 7.5 billion dollars in August and a similar amount in November, while Argentina agrees to meet the same fiscal goal of 1.9% that was foreseen in the previous scheme, despite the complications brought by the drought.
The big problem was that the Board of Directors of the international organization is in a summer recess, so the disbursements do not cover the payments of 2,600 million and 800 million, respectively, which will take place next week.
At first, the possibility of using the yuan line provided by China was evaluated, as was the case with the June payments, but finally a bridging loan from the Andean Development Confederation (CAF) would be used.
The understanding comes after the Ministry of the Economy agreed to carry out a covert devaluation by making imports more expensive through the Country Tax and the rise in the exchange rate for some agricultural exports, which is generating a greater currency settlement, which It was celebrated by the IMF in a statement published minutes after Massa’s words, with which the agreement was ratified.
“The agreed policy package should boost reserves for the remainder of this year, in line with a cumulative net international reserve accumulation target of around $1 billion by the end of 2023 (compared to a target of $8 billion in the time of the fourth review.) Reserve accumulation is also expected to be supported by improvements in the energy balance (as a result of the completion of the first phase of the pipeline) and by the expected recovery from the drought from the last part of this year”, they indicated in one of the central points of the negotiation to make the reserve goal more flexible due to the impact of the drought.
On the contrary, in the fiscal sphere, the Government did not achieve an improvement and maintains a challenging primary deficit target of 1.9% which, according to the Fund, would be achieved from an “updating of energy rates to reflect changes in production costs, while improving the progressivity of the system” added to a “greater rationalization of transfers to the provinces and state companies”.
Regarding the exchange issue, the organization led by Kristalina Georgieva agreed to endorse interventions by the Central Bank, although it made it clear that the highest monetary authority should maintain positive interest rates and avoid financing the Treasury.”
*News in development.
2023-07-29 10:47:54
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