The Government is working hard to achieve the disbursement of the International Monetary Fund (IMF) in a complex context for the reserves of the Central Bank (BCRA) and the economy in general. From the ministry headed by Sergio Massa they already see how a fact that the advance will come and now everyone is talking in the market about How will those funds be used?. Today the most influential factors are the payment to the Fund that is scheduled for July, a cancellation of debt coupons for Global bonds and the pressure on the exchange gap, which plays against it.
What is being sought is for the international organization to advance the more than US$10,000 million pending for the second half of the year and, as it was learned these funds would go to the Treasury and not the Central Bank. “This is agreed with the IMF, they can go to Economy, as happens when Special Drawing Rights (DEG) are assigned and with credits from international organizations,” explains a source.
And it is that the part of the IMF agreement that is defined as budget support goes to the Treasuryso that would be one of the points that is being negotiated at this time and another of the issues that is being discussed in the negotiation that the team is carrying out with the IMF is the possibility of using part of them to intervene in the equity market. changes, in the face of an electoral context in which it is feared that a new exchange rate run could occur again, as happened a few days ago, but even more accentuated, in the style of what was seen in 2019, after the elections primaries (STEP).
The Government needs to adjust what part of that money it would use for this purpose and they are negotiating that percentage with the body led by Kristalina Georgieva. And it is that, as indicated to Ambit the economist from the University of Avellaneda Pablo Ferrari, “before the dollar shortagewith the income from different sources that are generated, Economy must manage which imports are most relevant to sustain product momentumin the first place, and intervene in the exchange market to avoid possible exchange rate destabilizations, on the other hand”.
The expiration comes with the IMF
In this sense, when setting priorities, EcoGo economist Lucio Garay Méndez indicates that, although there is still a lack of June 20 and 21, which is the next payment date to the IMF, and the Government must safeguard dollars for that purpose.
In this way, Alejandro Giacoia, an economist at Econviews, maintains that “if the maturity profile is not modified, the dollars disbursed by the IMF are necessary to cover those payments”, even if the time of disbursement is modified.
However, Garay Méndez warns that everything indicates that “this stand-by period that runs while political changes take place He is wearing the dollars from the Centralwhich, in recent weeks, accelerated its intervention in the parallel market”, which could change priorities.
From EcoGo, they calculate that, due to this situation, net reserves fell below US$1.3 billion. And, faced with this situation, Garay Méndez warns that “it is unknown what destination these funds will really have”, since, on the one hand, the Government you need them to pay the Fund itselfbut, at the same time, the few dollars that there are are leaving to pay for imports, although much less than last year, and to control the exchange gap, so foreign currency is needed to prop up those fronts.
Regarding this last aspect, Ferrari considers that “the problem is not the Government that applies a defensive policy against destabilization, but rather the concentrated sectors that try to force a devaluation to obtain financial gain”, since, in this way, the inflationary process.
Dollar: exchange management, a topic of debate
Thus, according to his vision, exchange rate management should not be considered an undesired transitory defect, but rather a permanent and fundamental virtuous attribute of economic policy for a country like Argentina. that would be a point essential to discuss with the IMF, that limits the possibility of foreign exchange intervention in the agreement.
For the economist and director of Analytica Claudio Caprarulo, the most important thing will be to know what are the conditions under which the IMF would advance US$10,000 million to Argentina. “The most optimistic scenario is the one in which it agrees to do so and modifies the payment terms of the debt, leaving that disbursement as a net income this year,” he describes. And he considers that, in that case, the Government should use that money to grow its net reserves and demonstrate that it has the capacity to sustain the rate of depreciation of the official dollar that it has been maintaining.
However, even if, in addition to advancing the funds, the IMF decides to postpone the maturities, in which case some dollars would remain available, Giacoia believes that “it is necessary to see if the organization is going to want the Central Bank to sell those dollars at a price equivalent to half of what they are worth in the market to pay for imports”, as he has been doing and points out that, in case he resists, it would be possible for him to ask “a devaluation or, at least, a doublingfor foreign trade.
Thus, as stated with Caprarulo, these dollars should be used as a sign of greater strength in the economy and encourage fear of a strong exchange rate jump without State control in the coming months.
Source: Ambito
