The Board’s decision allows for an immediate disbursement of SDR 4.5 billion (about $6 billion), bringing total disbursements under the agreement to about $23.5 billion.
In completing the review, the Board of Executive Directors assessed that “all quantitative performance criteria were met until the end of September 2022, thanks to the prudent macroeconomic management of the new economic team”.
In addition, the Board also “approved default waivers associated with the introduction of policy measures that gave rise to new foreign exchange restrictions and multi-currency practices and called for their reversal when conditions permit.”
At the conclusion of the Executive Board discussion, Gita Gopinath, First Deputy Managing Director and Acting President, said: “Continued decisive political actions are beginning to bear fruit. In a more challenging external and internal context, the determined implementation of policies, including the tightening of fiscal and monetary policies, is leading to a reduction in inflation, as well as improvements in the trade balance and reserve coverage.”
Fragility
However, Gopinath stated that “macroeconomic imbalances persist and conditions continue to be fragile. Therefore, Continued improved implementation of the program will be critical to achieving key program objectives and maintaining the program as an anchor for stability.”
Although the IMF granted waivers for the Argentine government’s exchange rate policy, it asserted that “Exchange restrictions and multiple currency practices they must be avoided and eliminated as soon as conditions allow, and macroeconomic imbalances must be addressed.”
Continuing with its policy, the IMF insists that “Fiscal consolidation will be needed as budgeted to support disinflation and reserve build-up processes, ease financial pressures, and strengthen debt sustainability.”
In this sense, the fiscal goals are maintained and it is considered that “Reduce the primary fiscal deficit to 1.9% of GDP in 2023 and, at the same time, provide space for priority infrastructure spending It will require continued efforts to mobilize revenue, strengthen spending controls, and most importantly, improve the targeting of energy subsidies and social assistance..”
The Fund also reiterated that to increase credibility. “Sustained positive real interest rates remain essential to reduce persistently high inflation and strengthen demand for peso assets”.
In this sense, they consider that in this way it will be possible to achieve “improvements in competitiveness and reserve coverage, while avoiding dependence on ad-hoc exchange rate incentives and restrictions, since they are not a substitute for consistent macroeconomic policies.”
Another endorsement from the IMF referred to the price policy. In this regard, he points out that “voluntary price-wage coordination could play a complementary role as macroeconomic imbalances are addressed”
The issue of debt in pesos is a matter of concern for the agency. From this perspective, he points out that “A proactive market-oriented debt management strategy is vital to mobilize domestic financing, mitigate rollover risks, and reduce deficit financing by the Central Bank”.
The Fund also celebrated the restructuring agreement with the Paris Club creditors and considered that the mobilization of support from multilateral and bilateral partners remains essential to ensure that financial commitments are met and reserve coverage is strengthened.
Finally, it is noted that “Continued efforts on the structural front remain key to supporting broader macroeconomic objectives. And he concludes that “Broad political support for program policies remains critical in the coming period”, a statement that is not surprising considering that next year there are elections.
In the immediate future, analysts point out that, given the improvements in public accounts that have been registered in the last part of the yearthe perspective is that the Fund will also approve the fourth revision of the program, which will take place at the end of March.
Source: Ambito
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