Sources from the Ministry of Economy confirmed to Ámbito that, with the endorsement of the credit agency, Argentina will cancel payments for more than US$2.5 billion that operate in July at the end of the month. This week some US$1.3 billion were due.
The Government will pay the International Monetary Fund (IMF) at the end of the month the maturities for just over US$ 2,500 million that operate throughout July. “Payments are unified,” official sources confirmed to Ámbito after agreeing on the format with the credit agency. In this way, there is room to complete the renegotiation and obtain a new disbursement of Special Drawing Rights. Meanwhile, the Minister of Economy, Sergio Massa, continues to discuss with Washington the reformulation of the program.
This novelty will bring relief to reserves outlook of the Central Bank of the Argentine Republic (BCRA). According to estimates by the consulting firm Ecolatina, the entity’s net reserves are in negative territory for US$5.3 billion. According to the original schedule, about US$1.3 billion were to be paid this week and another US$650 million next week. In total, during July they operate maturities with the Fund for just over US$2,500 million.
The mechanism of postponing maturities until the end of the month has already been done on other occasions. The last one was in June, when the Government ended up fulfilling its obligations to the multilateral organization with a remnant of Special Drawing Rights for the equivalent of US$1.7 billion that remained in the reserves and with “freely available” yuan that was obtained. for the exchange of currencies with China for US$1,000 million.
In this way, Minister Massa will continue discussing with the Fund authorities the reformulation of the program, whose goals were buried by the effects of the drought that will deprive Argentina of exports of nearly US$20,000 million this year. A senior source from the economic team described the negotiations as “arduous” although he was optimistic about the possibility of closing the agreement in the coming days and obtaining an advance on disbursements. that allows clearing the financial horizon.
The main unknown is determining the volume of that advance and also whether a percentage of the dollars can be used to intervene in the market and keep parallel prices at bay. This point is central to the Ministry of Economy, which understands that the slowdown in inflation, which with the June data will accumulate for two months, is mainly due to exchange peace.
This week, the Government also confirmed that it will pay around US$1,000 million of the coupons for the restructured debt in 2020 in the coming days. “We once again reaffirm our commitment to the payment of public debt obligations and the management of a financial strategy that provides peace of mind and certainty to the markets”, said the Secretary of Finance, Eduardo Setti.
With this scenario, at the Palacio de Hacienda they are also exploring other ways to strengthen the exchange front. On the one hand, an agreement with Brazil is advancing to finance part of the imports from the neighboring country. On the other hand, a new scheme is analyzed to encourage exports from the agricultural sector. Any news on these two points will be confirmed once the negotiations with the IMF are closed.
Source: Ambito
