gabriel rubinstein
The Government guarantees the International Monetary Fund (IMF) that the fiscal situation is under control and that the only problematic focus to meet the primary deficit goal of 1.9% of GDP is the consequences of the drought. And then, if there are finally deviations from that percentage, it will be a matter of calculating them to the loss of revenue generated by the climate phenomenon in the first half of 2023 and not to problems of increases in public spending or deviations in the revenue plan already originally agreed with the organization managed by Kristalina Georgieva.
Argentine officials show on the screens installed in the Palacio de Hacienda on which they negotiate with the members of the IMF staff who are on the other side via Zoom in Washington, that in the first four months of the year the imbalance climbed to 0.6 % (which is a faster level than what was agreed), but also that the rate of spending was reduced by 11% and that tax collection is 10% below inflation due to the effect of the fall in revenue from import duties linked to primary exports.
The economic team assures that these latest data will improve substantially this month, when the income linked to the agricultural dollar program is calculated, and that it is the obligation of IMF officials to take into account that the imbalance is related to the drought. An effect described as unfavorable exogenous circumstances that prevent the country from meeting the goals agreed in the Extended Facilities signed in March 2022, and which are contemplated in the fine print of the agreement signed and approved by the agency’s board.
After the debate on the fiscal question, which is being addressed in these negotiating hours, the discussion continues to focus on the management of the exchange rate policy and the evolution of the exchange rate gap via agreed, controlled, somewhat manipulated and perhaps artisanally executed devaluations; The local ruling party is waiting for the policy to give the result that is promised to the organization. The argument by which the Fund could accept the affirmation that this “crawling peg” could give results is the explanation that the Argentines gave to the people of Washington that a shock would be inflationary; while the gradual and controlled devaluation of the official through accelerations and brakes in the rise in the price of the dollar may have a minor consequence on the CPI.
It was explained to the IMF that the increase in prices of food and other goods refers to the speed of financial dollars and the blue, but that the acceleration of the fall of the gap depends on their not escaping. And that, consequently, the articulation must be through agreed devaluations of the official, with containment and direct intervention of the Central Bank.
The negotiators of the agreement continue to be the vice minister of the Economy, Gabriel Rubinstein, the person in charge of relations with international organizations, Marco Lavagna, and the chief of advisers to Sergio Massa, Leonardo Madcur, on the one hand; and the new manager for the Western Hemisphere of the IMF, Rodrigo Valdés, his number two, Niguel Chalk, and the person in charge of the local case, Luis Cubeddu, for another. It is, in fact, the last chapter to discuss between the agency and Argentine officials, once the other articles of the new Extended Facilities have already been practically defined.
Source: Ambito
