The Minister of Economy, <a href="http://www.world-today-news.com/carlos-zannini-asked-the-justice-to-summon-the-imf-authorities-who-granted-the-credit-to-mauricio-macri/" title="Carlos Zannini asked the Justice to summon the IMF authorities who granted the credit to Mauricio Macri”>Luis Caputo, participates in Washington in the Annual Meetings of the IMF and the World Bank that began on Monday, October 21 and end this Saturday, October 26. From Washington, Caputo confirmed several loans.
On the one hand, loans from the World Bank and the IDB for US$8.8 billion. The amount sounds important, but in reality there were no details of a disbursement schedule nor to what extent these were loans that had already been previously agreed upon, nor even what would be the net income of dollars to the country due to the fact that there are payment commitments to carry out in favor of these multilateral organizations.
A “repo” was also confirmed. This is a loan backed by Argentine bonds that would be granted by private banks. The amount will reach around US$3,000 million. Banco Santander and JP Morgan will participate. The latter is the same one who dealt a devaluating blow to Mauricio Macri in April 2018 and who was Caputo’s employer for a large part of his professional career.
Today, Thursday, Caputo met with Kristalina Georgieva, director of the Fund, to advance negotiations with the perspective of agreeing on a new program. Let us remember, the current program, agreed upon by Martín Guzmán, expires at the end of the year.
It was a “Very, very good meeting,” Georgieva said after meeting with the Minister of Economy. Georgieva explained that there is “an agreement on the country’s priorities.”
Everything indicates that on both sides they will wait to see what happens in the United States elections on November 5: Milei prays that Donald Trump wins and that he receives dollars through the IMF.
The government’s expectation is to obtain fresh dollars from the Fund by trying to limit the demands that include the flexibility of the exchange rate regime, the lifting of the stocks and the unification of the various exchange rates that exist (official dollar, MEP dollar, CCL dollar, etc). The government fears that this combo demanded by the IMF will trigger inflation.
However, the fresh dollars that Caputo could eventually obtain would not comprise a large volume: there is talk of about US$ 10 billion. It is a much smaller amount in relation to the US$ 44 billion that Mauricio Macri obtained.
But an eventual victory for Trump is not a blank check within the IMF where the other G7 powers that have weight in the Board of Directors view Argentina with great suspicion because our country is the main debtor of the multilateral organization.
From all these announcements or trials we will have to see what becomes effective in reality. In principle, the government would be ensuring compliance with the January 2025 debt maturities and the rest is uncertainty.
So much so that the risk rating agency Moody’s analyzed in its annual conference that Argentina presents a scenario of debt re-profiling with private creditors.
This implies that it does not foresee a complex restructuring, but rather a friendly negotiation. However, a re-profile outlook is indicative that the country will not have the dollars necessary to pay all its debt maturities in 2025.
Moody’s also states that the tension in external accounts will continue over the next three years and does not believe that there will be a significant inflow of capital.
Let’s recap. More loans from the World Bank and the IDB, the “repo” with international banks, negotiations with the IMF to obtain fresh dollars and a possible re-profiling of the debt with private creditors. When all these elements are brought together, what is observed is that Caputo is preparing a new debt festival.
It is the same thing that was done under the Government of Mauricio Macri. What was the result? A large part of the dollars that came in due to debt, went out the other window in payments of that same debt and in capital flight from the richest in the country and the most powerful businessmen.
Then there was the mortgage of a debt for the working people to pay with the adjustments that we are seeing in education, health, in retirement benefits, in subsidies in public services and, their counterpart, the tariffs.
Today the “markets” celebrated the news that came from Washington with a general rise in Argentine stocks and bonds, at the same time that the Country Risk fell.
All this occurs when, according to the projections published by the IMF this week, Argentina will have one of the worst performances in the world this year due to the fall in GDP and high inflation.
The festival of the markets is a dark message that should alert us to the repetition of the horror story to which we are subjected with eternal debt.
Source and complete program: La Izquierda Diario.
