The country must face maturities with the agency at the end of this month for more than 4,000 million dollars, but experts consider that the Central Bank has sufficient resources (among them those provided by the Special Drawing Rights provided by the Fund) to attend payments without difficulties until the next disbursement occurs.
Rice also noted that the modification of the quarterly goals of the agreement between Argentina and the International Monetary Fund will be known in a report which will be announced after consideration of the case by the Board of Directors of the agency and will include a revision of the inflation estimate.
After affirming that all the quantitative goals for the first quarter were achieved, on repeated occasions Rice emphasized that the annual goals committed to in the agreement “remain unchanged” and considered that its compliance “is critical for the economic recovery” of the country.
The Fund also values the progress that the country is making in different areas, such as energy. It should be remembered that at the beginning of the month a tariff increase was ordered and that the reduction of energy subsidies is a central aspect of the program.
The change in quarterly goals happens “regularly” in these programs, the spokesperson said. He argued that they were the result of changes in the international context stemming from the war in Ukraine.
Precisely one of the consequences of the war is the rise in food prices and, in this sense, the inflation forecasts for Argentina will be reassessed since These increases are having an impact on the price indices.
Although the acceleration of prices is a global phenomenon, it is clear that in Argentina inflation has a particular dynamic, from which it is to be assumed that the Fund will insist on policies such as maintaining positive interest rates in order to encourage savings in pesos.
Support for
The IMF has turned out to be the best ally that the minister has today Martin Guzman. It is that having announced the modification of the quarterly goals makes it easier for it not to fail to comply with the second review which, with only a few days left for its conclusion, private analysts already estimated that it could not be fulfilled.
From the Fund’s side there is also recognition of the Argentine Government. In the statement announcing that the country met the goals for the first quarter, it is stated that “IMF staff thanks the Argentine authorities for the open and constructive discussions and welcomes their firm commitment to implement the programwhich aims to help Argentina strengthen economic stability, address persistently high inflation, and continue to address its historic challenges.”
It should be remembered that a primary fiscal deficit target of 2.5% of GDP was set for 2022, while at the same time reducing monetary financing to 1% of GDP.
Although it is true that the annual goals are left unchanged, in any case, these changes make it easier not to fall into non-compliance. “Everything is kicked off by the end of the year”, summed up an international analyst. Another piece of information that shows “the good will or flexibility of the IMF” is the acceptance of the “accounting creativity” that allows Argentina in this way to fulfill the “forms with the goals. The question is whether this creative accounting will be approved by the agency in the future.
Approval
It should be remembered that on Tuesday night the approval of the first review of the assistance program granted to Argentina was announced, as the country had met all the quantitative goals for the first quarter of the year,
The relevant novelty was that it was agreed to modify the quarterly goals, but maintaining the annual objectives. In this way, once the review is complete, Argentina will have access to some US$4.03 billion.
According to the statement for the Fund “all the quantitative goals of the program for the first quarter of 2022 were met” and adds that “progress is also being made on growth-enhancing reforms in line with program commitments”.
However, the statement states that “taking into account the initial impact of external shocks and seasonal spending and import patterns, it is proposed to modify the interannual quarterly goals of the primary fiscal deficit and the accumulation of reserves, keeping the annual program objectives unchanged” but the annual goals will remain unchanged. Since they consider it to be “essential to strengthen stability and support the ongoing economic recovery.”
and celebrate “the commitment of the authorities to implement additional policy measures to achieve these annual objectives.”
Disbursement
The deal”it is subject to approval by the IMF Executive Board, which is expected to consider it in the coming weeks. Once the review is complete, Argentina will have access to some US$4.03 billion (equivalent to SDR 3 billion).”
In another section of the statement it is highlighted that “progress is being made on the structural agenda and growth-enhancing reforms in line with program commitments, including on the energy front”.
And regarding the consequences of the war in Ukraine, he affirms that it will have “limited impact on Argentina’s growth and balance of payments this yearbut – as in most other countries – the rise in world commodity prices has already caused higher inflation” warn the technicians of the Fund.
It is clarified that “despite the recent increases in energy tariffs, Argentina’s fiscal position is also being affected by the shock of the prices of raw materials due to an increase in energy subsidies and an adequate expansion of support”. targeting low-income households.
The statement points out that “the Argentine authorities are committed to implement policies to achieve the annual objectives of the primary fiscal deficit program, monetary financing and accumulation of reserves”.
It maintains that “they have also reaffirmed their commitment to continue applying the monetary and exchange rate policy framework to achieve positive real policy interest rates, ensure the competitiveness of the exchange rate and support the accumulation of reserves of US$5.8 billion for all year.”
Policies
The fund puts Emphasis on the need to continue applying the agreed policies. From this point of view, the statement states that “Looking forward, decisive policy implementation will be critical to ensure that the program’s goals are met throughout the remainder of 2022 and beyond.” This also includes taking measures to mobilize net domestic financing in pesos, improve the transmission of monetary policy, reduce tax evasion, strengthen the AML/CFT framework, and encourage investment in strategic sectors.”
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
