The key is access to finance. The Government finalizes details based on balance of payments needs, but above all on the critical importance of accumulating reserves at the beginning of the program. Otherwise, they understand, much of the management would run the risk of being shipwrecked. The discussion is about the staggering of these disbursements. The higher the sum at the beginning, the more chance of not having to fight with the IMF negotiators every three months.
Contrary to what is assumed, there will be an arid mechanics of follow-up in the fulfillment of the program committed to with the IMF. Guzmán has agreed with the agency’s negotiators on a long series of mechanisms that suggest a demanding control and supervision structurea kind of co-government guarantee from now on with the Casa Rosada.
It is known that the program will be supervised through quarterly reviews and previous actions. But the fact that until now was not taken into account is that there will be “quantitative performance criteria, indicative targets and structural benchmarks”. The IMF has demanded that Guzmán leave everything in writing, a real contract with stipulated clauses that do not allow any discussion about the success or failure of the established goals. For this, the quantitative and continuous performance criteria and the indicative objectives will be incorporated into the document that will be sent to Congress, but it will specify them in more detail in the so-called “Memorandum of Technical Understanding” who works separately. Previous actions, along with proposed structural benchmarks, are also outlined.
Within the framework of the announced fiscal objectives, The Government will commit to take care of a “floor” of the primary balance that will be cumulative, but also subject to adjustments for capital and social spending. will also commit to not accumulate “arrears” in external debt payments. A “zero limit” commitment is included in collateralized indebtedness, including indebtedness through repos collateralized by Argentine government securities, contracted by the federal government, the provincial governments or the BCRA. will also put monetary goals, a minimum limit of the variation of the net international reserves not obtained in loan and a maximum limit of the credit of the Central Bank to the government.
controversial point
Another point is the question of economic growth and inflation. Ambit He announced in recent days that the document to be sent to Congress will mark the horizon of projections planned by the Government. Sources maintain that the document indicates an estimated growth of between 3.5% and 4.5% in 2022.
However, the projections for subsequent years included in the letter of intent, could raise some questions, since the estimated (and intended) growth of the Casa Rosada, on average, per year, will be from 1.7% to 2.2% per year, that is, low growth. This projected “landing” in the activity -which will surely be in charge of conserving the dollars to accumulate in reserves and start paying- will be done, they maintain, at the same time, reducing inflation, in a gap that would go between 35 and 45 % approximately by the end of 2022. The promise that Guzmán will turn to Congress will say that, in his plans, there will be a commitment to reduce inflation by 5% per year with a “arrival” date in 2024.
Source: Ambito
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