The IMF cannot prohibit the country from executing any type of decision regarding the dollar control strategy, but from Washington they reserve the power to give their opinion every time an inspection mission of the agency completes its task, and develops the paper of general conclusions on the performance of the Argentine economy. This work is then submitted to the board, which is later in charge of approving or not the goals and objectives for each quarter, so that the IMF finally releases or not the dollars to cover the maturities of the previous standby.
The good news is that for an agreement to fall through, due to the negotiation that Martín Guzmán applied during the spring summit of the IMF in April in the capital of the United States, the revision of the goals will be annual. This does not imply that if there is something that the Fund does not like, it is not written down in the quarterly reports after each mission. And, it is clear, that the exchange rate policy is part of these chapters. Especially if one takes into account that one of the objectives set with the Fund speaks of the need to reduce the exchange rate gap and that this does not exceed 50% this year. In times of distances between the official and the financial dollars of more than 150%, that objective is something similar to a utopia.
Hence the need to explain in detail to the people of the IMF when the second mission is completed, which would happen in August. To receive this mission, which could once again be virtual, the Government knows that beyond the exchange measures of crossed and multiple stocks and permits for tourists and other sectors to receive contributions similar to the MEP; What the Ministry of Economy must explain is how the Executive intends to apply the official’s controlled devaluation policy, so that the exchange rate is not delayed by inflation. This is the true goal committed to the IMF by Guzmán in the negotiations closed with the agreement of March 25, and implies the obligation of the Government not to delay the peso against a dollar updated by the rise in prices; something that is happening so far in 2022. In fact, and beyond the exchange rate run that has already lasted six weeks, the official devalued 25%, with accumulated inflation of 36.2% in June; and that could rise to almost 45% in July.
The Government could explain to the IMF what happens with financial and illegal dollars; and manifest itself as dispensed with (at least in 2022), in the policy of crossed traps applied by the Ministry of Economy in these complex times. But where it will deepen the controls, it will be in the accumulated inflation and the delay of the officer.
At this point, the officials who will face the people of the IMF, will have to expand with solid explanations. For now, the Government trusts that there will be understanding and that a possible request for an annual waiver will not imply an acid, direct or terminal criticism of the Extended Facilities. The Government continues to trust that a final rise in inflation of 70% is defensible for the entire year, which in the midst of the current storm, is speculated in Buenos Aires, would be acceptable.
The fundamental thing in this case is that the current situation be observed from the Fund with a June-July two-month period to be forgotten and exceptionally bad; but with an August with the most dominated situation. It is trusted in Buenos Aires that this will not imply the fall of the agreement, that Washington will accept the breach and that the variable can be renegotiated to a more real percentage. As long as the main commitment is not altered. That is, a fiscal deficit of 2.5% ceiling; a goal that also became something of complex fulfillment.
Source: Ambito
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