The Minister of Economy, Sergio Massa, will travel to the city of Washington “in 10 days” in order to close the readjustment of the agreement with the International Monetary Fund (IMF).which would allow Argentina to obtain the advance of disbursements and new goals to meet, after the impact of the drought on exports from the agricultural sector, official sources confirmed to Télam.
Negotiations between the economic team and the technical officials of the Fund have been advancing for almost two months through virtual meetings, in which they are defining how to modify the old agreement, virtually suspended after the reserves and fiscal goals were not met in the first trimester.
The goal of Economy is for the Fund to advance, at least, a part of the disbursements that had been committed until the end of the year for some US$10,600 millionwhich would give air to the reserves in a year in which the exports of the agricultural complex will fall by nearly US$ 20,000 million, according to projections of the Rosario Stock Exchange (BCR).
Weeks ago, Spokespersons for the Fund assured Télam that negotiations were advancing around “ways to strengthen the program and safeguard stability in light of the severe drought.”who indicated that the dialogues take into account how to “strengthen the reserves”.
“This (by negotiation) includes policies to improve fiscal sustainability and strengthen reserves, both essential to reduce inflation, while protecting the most vulnerable,” the sources added.
Dollars to intervene in the market
At the beginning of May, the Minister of Economy, Sergio Massa, stated that “everything was on the table” in the discussions with the IMF and stressed that “the intervention capacity of the Central Bank is inalienable”, referring to the possibility that the monetary authority operates in the bond market to reduce the volatility of the price of stock dollars.
According to Massa, the impact of the drought implied a “game change” in the scenario that was envisioned at the end of 2022, and the key to reformulating the disbursement program and modifying the goals agreed in March 2022.
The objective of the economic team is, without making a new program -which would imply the drafting of a law that passes through the Argentine Congress and a vote in the framework of the Board of Directors of the Fund-, to achieve that the organism advances -at least- the disbursements planned for the second half of the year for some US$10.6 billion.
“Electoral political years in Argentina always generate the dollarization of portfolios in the face of this feeling of uncertainty. We want the Central Bank to have the capacity to intervene, not to distort markets, but tools to generate certainty, tranquility, at times when political uncertainty It can generate some difficult situation,” Massa said about the need for the government to have the capacity to intervene in the behavior of the financial dollar markets.
And I add: “The stability of the Argentine economy depends a lot on whether we have the Central Bank active or taking care of reserves. In our case, and in our view, for a few weeks, also, taking care of the stability of financial dollars”.