The Minister of Economy, Sergio Massamet this Wednesday in Washington with the first deputy managing director of the International Monetary Fund (IMF), Gita Gopinathto ask for a new review of the agreement in force for Argentina, after the harsh impact of the drought and the war in Ukraine on national exports and the shortage of dollars that this situation causes for the country.
as far as he could tell Ambit, Massa and India Gopinath evaluated the last part of the agreement, which was approved two weeks ago by the organization’s technical staff and which must now be dealt with by the Board of Directors so that the disbursement of around US$5,300 million (about 4 billion SDR, the currency of the IMF). Specifically, the minister will request to make the assumed goals more flexible and reschedule the pending disbursements for 2023.
As of today, it transpired that the technical teams of the Ministry of Economy and the IMF worked on an extra refinancing of US$3 billion for this quarter and others u$s2,000 million for the rest of the year, although the predictions about the impact of the drought throw a tail for the country by US$20,000 millionfurther an additional $4.94 billion for the war between Russia and Ukraine. It is not ruled out that the IMF postpones all pending commitments for the year.
The meeting between Massa and Gopinath will include other members of the organization and the delegation accompanying the minister for his visit to the capital of the United States, where he already met with authorities from the Homeland Security Investigations (Immigration and Customs Control Service, in English), to finalize details of the exchange of customs information.
IMF sources specified that the managing director, Kristalina Georgieva, will be in China until Thursday, March 30, so she will not participate in the meeting.
Last week, the new spokesperson for the IMF and former head of the Fund’s mission in the Argentine case, Julie Kozack, assured that the agency’s board of directors will deal with the Argentine case “very soon” to approve the $5.3 billion agreed, after the approval of the technical review of the staff.
In this regard, he noted that “typically there is a period of time” that the board of directors takes no less than two weeks from the approval of the technical review, which in the Argentine case was the last March 13, in which the review of reserve goals for the period 2023 was also agreed.
Kozack praised the prudent management of the macroeconomic policies verified in the second part of 2022, in pursuit of “stability”, and highlighted “compliance with the program with a certain margin” over the goals set for the end of the fourth quarter. When consulted by the press, the Fund official also referred to the recent bond swap and other measures related to public debt.
“Regarding the recent government decisions regarding the debt, we are aware of those decisions and we are evaluating them according to the objectives of the programs,” Kozak said during her first press conference as an IMF spokeswoman last Thursday.
“In our view, prudent debt management is necessary to improve the functioning of the bond and foreign exchange markets. But it must be conducted in a way that does not add vulnerabilities along the way,” he pointed.
On March 13, the Government and the technical staff of the IMF reached an agreement around the fourth review within the framework of the Extended Facilities agreement, which is now subject to the approval of the Executive Board of the multilateral organization. Once the review is complete, Argentina will have access to about US$5.3 billion (4 billion Special Drawing Rights, SDRs, the IMF currency).
“In a more challenging economic context, particularly the increasingly severe drought, stronger policy actions are needed to safeguard stability, address rising inflation and policy setbacks, as well as maintain the program’s anchor,” he summarized. Kozack, without further details, awaiting the pronouncement of the agency’s board of directors.
The Fund announced, however, that Argentina requested a modification in the reserve goal and that “most of this accommodation be made at the beginning of 2023”, due to the severe drought that the country is suffering, which will impact income from especially agricultural exports.
From the Palacio de Hacienda they let it be known that the reserve goal would have decreased by 2023 by 2,000 million dollars compared to the original guideline. And that the guideline for the first quarter of the year could even be reduced by 3,500 million dollars.
Massa’s agenda in the United States included a meeting with the president of the Inter-American Development Bank (IDB), Ilan Goldfajn, an organization with which Argentina has a total amount of credits approved for more than US$12,750 million in development projects. water and sewage, transportation, housing, science and technology, and others.
As confirmed by the Argentine ambassador to the United States, Jorge Argüello, Massa will accompany President Alberto Fernández, who will hold a bilateral meeting with the president of that country, Joe Biden, at the White House, in the second part of the meeting, in The Secretary of the Treasury, Janet Yellen, and the National Security Adviser, Jake Sullivan, on the side of the US government, among other officials, will also be present.