The Minister of Economy, Sergio Massa, will travel this week to the United States to negotiate relief with officials of the International Monetary Fund and the North American Government on the external front to get through the impact of the drought smoothly. Alberto Fernández, after his meeting, classified it as a “bridge” until next year. The efforts include recalibrate program goals, adapt disbursement schedule, and secure fresh funding of multilateral organizations.
At this time, most of the management efforts are focused on get dollars. It is not new. In the Palacio de Hacienda they even put a specific number on this race against time to reinforce the reserves of the Central Bank: u$s10,000 million. That figure, as they explain, guarantees reaching the next harvest without major exchange rate problems.
With that objective, Massa began a tour that will last between this Wednesday and next Saturday. The rally will culminate in the United States but will have a previous stopover in the Dominican Republic for the Minister of Economy to meet with the Undersecretary of State of the White HouseWendy Sherman, who will then travel to Buenos Aires to meet on Friday with Foreign Minister Santiago Cafiero at the San Martín Palace.
The second most important official of US diplomacy was appointed by Biden to continue the agenda that was drawn up in the bilateral with Alberto Fernández. The central point there is the “bridge operative” to avoid, at least for this year, the impact of the drought in the external sector. For this, the Government aims especially at modify the goals of the agreement with the International Monetary Fund and add financing from multilateral organizationsThey say, for up to $5 billion.
In all these aspects, the United States plays a fundamental role. As a majority shareholder and as a political driver. According to what they say in Economy, Sherman specifically asked to meet with Massa, who is known to have well-established ties in the northern country. Other points of the negotiation also go through trade: Argentina wants to enter a system of preferences that would remove tariffs on its products. They also aim to accelerate investments in lithium, where for now there is a strong Chinese predominance.
Disbursements under the magnifying glass
Already in Washington Massa will participate in the Spring Assembly of the IMF and the World Bank. The official agenda also includes the meeting of the International Monetary and Financial Committee, a working breakfast with economic authorities from South America and Mexico and a meeting organized by Kristalina Georgieva with Ministers of Finance and Governors of Central Banks of Latin America, Canada and the United States.
During his official mission, the Minister also plans a working meeting with the Deputy Managing Director of the International Monetary Fund, Gita Gopinath. As stated, the Government seeks to reformulate the program with the International Monetary Fund. Something that partially occurred in the last review, where the reserve accumulation target was cut by US$2 billion. “In that calculation the impact of the drought was underestimated”, said a local official who wants the real magnitude of the climatic event to be taken into account.
What’s new is that in the Government they let it be known that the program review could include not only modifications in the quantitative goals, but also in the schedule of payments and disbursements. Under the current scheme, Argentina should pay the Fund, net, close to US$4 billion this year. Something that given the reserve situation seems impossible.
An experienced Fund official reminded Ámbito that This format of modifying the schedule of payments and disbursements without incurring in a new program has already been used. The precedent is uncomfortable for the opposition because it dates from the first review of the Stand By agreement signed in 2018. Little space will be left for criticism from that political sector if this tool is finally used.
Source: Ambito
