Alvarez Agis qualified as “a great achievement” having reached an agreement where the Fund tends to guarantee the goals of international reserves to stabilize the economy, in a conference organized by the Mega QM Space, whose name responds to the administrators of mutual funds Megainver and Quinquela Fondos, which at the end of 2021 agreed to their merger.
According to the economist, in general “The Fund usually asks you to accumulate reserves, and in this case it pays us to make a reasonable monetary policy, not to delay the exchange rate, raise the rate to positive levels in real terms, helping to calm expectations and improve yields” .
He also referred to the net financing from the body that there will be during the first year, which would imply that Argentina recover about $5 billion in reserves that he paid to cover the debt maturities of the previous plan, beyond the maturities scheduled with the IMF for this year of nearly US$19,000 million from the program inherited from Macri.
“In the 2018 agreement, a kind of optimism was assumed in the markets that did not happen. The program that was signed in June had an assumed financial program that Argentina could refinance some US $ 22,000 million only in the fourth quarter of that year, and when September 2018 arrived, it was evident that given the country risk and capital outflow, it did not refinance anything”he explained.
Instead, in this case, “The Fund says just in case I put the money and see if that helps to stabilize”, he added.
He indicated that “the IMF’s task is solve the balance of payments crisis, In general, the Fund does its job well, according to the current account results of each agreement, it solved the balance of payments crisis”.
Álvarez Agis appealed to the memory of the past agreements signed with the Fund, to assess what could be expected from the results of the memorandum of understanding that the Executive signed with the IMF staff and that is now being discussed in Congress, as a preliminary step to reach a definitive agreement.
“In all past agreements with the IMF, inflation beat devaluation, despite the fact that the agreements suggested the opposite”said.
Regarding the goals of the IMF, He explained three major goals and commitments that Argentina will have to meet, which have to do with the fiscal deficit, the reduction of financing from the Central Bank to the Treasury, and the accumulation of reserves.
“The rest of the guidelines are indicative and are not goals,” Álvarez Agis clarified, trying to explain that if the subsidy guideline is not complied with -in a clear context of adversity and uncertainty-, it does not mean breaching the agreement per se, but rather that the Government could decide to lower the deficit in another way and even thus reach the goal with the Fund.
Source: Ambito
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