The first piece of information that gave an indication that the news was welcomed in the City was that the dollar bonds they shot up to more than 11% this Wednesday, January 10 and risk country wrote down his biggest daily drop in seven weeks, after learning that the Government planned to give news regarding an agreement, although they later moderated the positive reaction more towards the closure. There was also a good response from Argentine stocks on Wall Street, which jumped up to almost 6%.
And, as stated by the economist and director of Analytica Claudio Caprarulo, although “it remains to be seen what was agreed, in principle, It is positive that there is news because resolving this front allows the Government to reduce the uncertainty“.
In the same sense, Camilo Tiscornia, director of CyT Economic Advisorsmentions that “the problem of payments to the IMF is a concern for the Government to the extent that “The Central Bank (BCRA) does not have solid reserves”. Along these lines, he evaluates that, “although it is difficult to give an opinion on the agreement without knowing the technical details yet, It’s a good fact that the negotiation has been closed”.
IMF: a disbursement necessary to pay debt
Tiscornia remembers that The IMF still has a disbursement pending with Argentina and considers that, if this situation can be unblocked, it would help clear the maturities in dollars. The country must face the cancellation of debt with the organization for US$1,915 million in January, US$763 million in February and US$1,915 million in April, which totals about US$4,592 million in the first section of the year.
That, on the one hand, and, on the other, indicates that it would be important to achieve that contributes a greater amount to the pending payments to strengthen reserves and clear up the uncertainty that has covered the market in recent times regarding the economic policy of the current Government.
And it is that Sebastián Menescaldi, Eco Go economist, notes that “It is positive to reach an agreement to pay the capital maturities that are pending until April“and highlights that “it is good to have the agreement with the IMF within the program”, but warns that, if fresh money is not raised, the forward projection of flows will not be modified.
“The situation remains deficient and fragilebut it can be read as an endorsement that this economic program could work on the part of the Fund,” says Menescaldi. Thus, the Minister of Economy, Luis Caputo, and the President Javier Milei could partially counteract the distrust that is beginning to grow in certain sectors regarding the success of the economic program that they carry forward.
This distrust is encouraged, mainly, because The viability of the program is clouded by social discontent that could generate a sharp drop in real wages. with accumulated inflation that will be around 200% annually. Likewise, there is concern about weak political muscle that the Government haswith very little strength in Congress and a position that is not very open to the debate of measures, which is costing it many inconveniences on the way to making the economic deregulation that was initially proposed a reality.
New IMF goals: what to expect
On the other hand, regarding what can be announced regarding new IMF goalsTiscornia considers that What the Milei Government wants to implement is in line with the goals that the IMF could demand of it. “What it has been doing and some objectives, such as reduction of fiscal deficitis tougher than what the Fund would propose, according to what it has been proposing in previous negotiations. They have already devalued very stronglyon the other hand, which allowed the gap to be reduced,” he details.
Thus, consider that, at this moment, the body’s requirements seem more “fulfillable” than before, at least from a commitment point of view, if one looks at what was announced regarding tariffs as well. However, Tiscornia points out that It is likely that the IMF will require the Government to dismantle the exchange rate as soon as possible and unify the exchange rate. There may be a weak point for Argentina in the negotiation.
The truth is that, as Caprarulo states, It is key that, beyond the negotiations and the disbursement being achieved, “the goals are realistic because, if not, as has happened in the past, it will not serve to anchor expectations.” And he believes that “if a good agreement is reached, it can even be a boost to an economic plan that raises many doubts regarding its sustainability.”
Source: Ambito
