Throughout the weekend the Minister of Economy, Sergio Massa, and his team held virtual meetings with members of the International Monetary Fund that allowed them to reach an agreement that will enable a disbursement of US$5.200 millionas far as he could find out Ambit.
The understanding required two meetings between Massa and Kristalina Giorgievamanaging director of the organization, three with her second, Gita Gopinath and more than 140 hours of meetings via zoom with the technical staff.
Today will be known press report of the Staff Level Agreement which will contain the approval of program performance for the last quarter of last year. It is estimated that in the course of the morning the technical details of the agreement reached will be disseminated.
Besides, the agreement will be modified establishing “a set of monetary measures and reserve accumulation”. In this sense, it was found that “the Central Bank’s reserve targets will be changed, both annually and quarterly.”
It should be noted that, in the midst of a severe drought that is reducing income from agricultural exports, the Central Bank has lost reserves of more than US$1.4 billion so far this year. According to private calculations, the liquid reserves held by the monetary authority would be at a minimum of around US$2.2 billion.
The latest harvest projections, both from the Buenos Aires and Rosario Stock Exchanges, show that there would be a decrease in the order of 33 to 35% in the production of wheat, corn and soybeans, the country’s main crops. Consequently, between $15 billion and $17 billion in exports would be lost – and perhaps more if conditions worsen.
As a reference, the increase in energy spending last year derived from the war in Ukraine was about US$5,000 million, of which the drought would bring a negative impact three to four times higher.
Massa has been raising the losses that the drought will represent – and those that Argentina has already faced due to the war with Ukraine that complicate the fulfillment of the established goals.
As if that were not enough, international financial markets face new situations of stress such as the fall of Silicon Valley Bank in the United States and the liquidity problems that other financial entities are experiencing. So much so, the Federal Reserve announced this Sunday that an additional line of financing was established to help banks meet the requirements of depositors and avoid eventual runs.
In this context, the government is not only unable to meet the reserve target for this quarter (it is more than US$4 billion below), but the external front is highly compromised.
Regarding the fiscal goal, it transpired that the Fund questioned the “regressiveness” of the energy subsidy system.
It should be remembered that last month, the Secretary of Energy promised that this year the fiscal goal of reducing subsidies to 1.6% of the Gross Domestic Product will be met.
In this matter, the accounts were increasing. The Government allocated $12 billion in energy subsidies in 2021, which represented about 2.5% of GDP, and last year the figure increased to about $13,500. It happened that, due to the rise in international energy prices derived from the war in Europe, Argentina had to pay more for the gas it imported during the winter. In addition, it had to make record imports of fuel