“The teams from the IMF and the Ministry of Economy continue to work constructively to strengthen the program supported by the Fund in the context of the very severe drought”, reported this morning a spokesman for the multilateral organization.
“Discussions are ongoing virtually and the teams are expected to have several meetings this week to move the program forward,” concludes the concise message. Meanwhile, sources from the Palacio de Hacienda confirmed that “The talks are advancing constructively with the objective of rebalancing the program due to the impact of the severe drought”.
It should be remembered that the IMF agreed to modify the reserve target -by recognizing the impact of the drought- but did not change the annual fiscal deficit target -1.9% for 2023-. Although, the officials of the Fund, in all the latest statements, took care to highlight the drought that complicated the Argentine economy.
They also point out that this situation makes “more difficult conditions for policy makers”, as he said at the time, Nigel Chalk, vice principal Western Hemisphere Department.
There is a consensus among economists that the drought considerably affected the critical economic situation facing Argentina and for this reason, they officially admit, it is necessary to readjust the objectives of the program.
The scenario for modifying aspects of the current program with the IMF is not the best. “To the drought we must add an electoral year”, international analysts confess, a situation that makes decision-making more difficult in the Fund’s Board of Directors.
In recent statements, Kristalina Georgieva pointed out that the agency has analyzed the implications of the drought and, for this reason, the reserve accumulation target” while acknowledging that “We have the government’s commitment to continue refining policies in light of the conditions in which they find themselves.”
Although he left a recommendation that the
program success “It comes down to implementation, and implementation will continue to matter even in these very challenging circumstances.”
In other words, what the IMF aspires to is compliance with the new objectives that are established. On the other hand, it is already known that Argentina will fail to meet the goals set for this quarter.
It should be noted that it is estimated that the drought would have an impact of 3 points on GDP and the Treasury will lose collecting the equivalent of 1% of GDP due to lower withholdings.
Source: Ambito
