The Fund’s technicians will wait until they meet high-ranking Argentine officials traveling to participate in the joint IMF-World Bank Spring Summit in Washington. The Government assures on this issue that it will not be necessary to increase social security spending (already broken between income and disbursements) by more than 0.2% of GDP.
The Argentine negotiators before the International Monetary Fund achieved an objective of no lesser importance in recent days: that the pension moratorium is not objected to by the organizationand that the technicians who control the Argentine numbers agree to wait until April or May to rule on the regime that the National Congress approved last week. The Fund’s technicians will wait until they meet high-ranking Argentine officials traveling to participate in the joint IMF-World Bank Spring Summit in Washington to definitively evaluate the progress of the goal of meeting a fiscal deficit for the whole year of no more than 1.9% of GDP. And, if that percentage is on track to be achieved, the decision to incorporate into the retirement system the almost 800,000 people who, according to the new regulation, could join the current pension system, will not be questioned.
Meanwhile, They want to know two things related to the decision. First, the true fiscal impact of the measure. The Government assures in this matter that It will not be necessary to increase pension spending (already broken between income and disbursements) by more than 0.2% of GDPand that this percentage would only be reached by mid-2024. They also affirm from Buenos Aires that this expense could even be lower since there would be fewer people who would process their retirements through the Universal Pension for the Elderly (PUAM) destined to those who are unable to retire, which grants an amount equivalent to 80% of the minimum retirement.
The second chapter to be evaluated has to do with a macro situation. The IMF is observing that the general tax collection has been evolving below inflation for at least three months, with which every 30 days approximately 10% of income is lost. From the Ministry of Economy it is affirmed that this situation is conjunctural, and that by April there will again be a surplus relationship between collection and price rises. For the IMF, achieving this promise will be key to not questioning the new moratorium since, they affirm from the Economy, when the positive rhythm resumes, the spending for the new retirees distributed over the coming months will have no impact. in tax accounts.
The entire pension issue, including the moratorium, will be suspended until April, when the parties resume direct contact, after the approval of the 2022 goals, something that will happen in the coming days. As this newspaper announced, the Argentine negotiators who are discussing with the delegates of the organization managed by Kristalina Georgieva received confirmation in recent days that the terms and objectives for 2023 of the current Extended Facilities (both general and private), do not they will have to be defined these days and urgently. And that they will not influence the definition of the new reserve goal that the Central Bank must meet this year, which will surely be known this week; nor in the approval by the Board of the Fund for the year 2022.
The general economic objectives to which the country will have to commit this year (not the goals) will have a somewhat longer period of negotiation, and should be resolved by April. That month, between the second and third week, the always traditional Joint Annual Meeting of the IMF and the World Bank will take place in Washington, where Sergio Massa, the president of the Central Bank Miguel Pesce and the main officials who have among their duties the negotiation of Extended Facilities. To close the objectives, there will be time until then. But no more.
Thus, in the remainder of March and the first week of April it will be necessary to define, among other topics and in addition to the cost of the moratorium, monetary policy, the way in which Argentina will eliminate subsidies to public service rates for the sectors resources (something that was personally claimed by Georgieva before Massa at the G20 summit in India), what the country will do with the delayed real estate revaluation, how the rate of soybean liquidation is expected to increase, how the issue will be handled of the debt in pesos and the eventual linked monetary issue, what will be the strategy before the inflationary acceleration (and what would be the new brand that the two parties would accept for this year) and if the Treasury and Finance will insist on repurchasing debt in dollars.