Luis Caputo spoke to the market and assured that the exit of the exchange rate It will be done when three conditions are met. This in the midst of rumors where the city priced an exchange rate jump before the elections, given the progress of the negotiations with the International Monetary Fund (IMF).
“Dear friends, we will leave the exchange restrictions when the 3 conditions that we have proposed are met, as we have always said with the president. It is not a matter of dates. The economic program will continue to be the one proposed by Argentina. As Kristalina said , the Fund is very impressed with the results of the program and they are willing to continue supporting,” said the economy minister in his X account.
Caputo’s statements appear while meetings of the technical team of the International Monetary Fund (IMF) are being held with the purpose of reaching a new financial agreement. This agreement would contemplate additional disbursements aimed at accelerating the elimination of the exchange rate. The Executive seeks to guarantee a Minimum financing of US$11,000 million to strengthen the Central Bank’s reserves.
How are the negotiations going and what are the discrepancies with the IMF
In this regard, Scope could know that they exist few points of disagreement regarding the characteristics of the new program and the mission visit – which is estimated to be chaired by Luis Cubeddu (head of the negotiation) – surely the purpose is to conclude the conversations.
There are differences over monetary policy. The IMF is already seeking Argentina to dismantle the stocks and unify exchange rates. On this point, the Argentine Government agrees, but the discussion revolves around the timing and the way to carry it out. There is also the debate about whether the current exchange rate is balanced, an aspect that the multilateral organization has been questioning.
The president is convinced of the program being carried out and is not willing to put it at risk. He believes that the results support it. This position clashes with the dogmatism of the Fund’s technical teams.
Milei stated this Sunday that “at the beginning of our administration, the exchange gap was 180%. Today, that gap is practically dead and “We work day and night to finish cleaning up the Central Bank’s balance sheet and be able to lift the exchange rate once and for all.” In a speech given at the Milken Center in Washington, he also maintained twice that the IMF was surprised by the results of its program.
Thus, the one who will help unblock the talks will be Kristalina Giorgieva, they speculate in Washington, since she is “much more pragmatics”.
In principle, the amount that the Argentine government would seek from the organization is around 11,000/12,000 million dollars and the economic team is evaluating complementing this figure with a new REPO operation.
The conditions to get out of the stocks, according to Javier Milei
According to Javier Milei, in a speech given at the end of December 2024, the Government’s program is as follows: “the program generates induced inflation of 2.5% monthly. To the extent that we repeat another month with inflation around 2.5% monthly, it enables us to lower the ‘crawling peg’ to 1%. There we are going to have a target inflation of 1.5%. If that persists, we are in a position to go to a part already linked to the clean float and if we solve the Central Bank’s stock problem and the monetary base in the traditional format coincides with the broad monetary base, we are in a position to open the stocks ”.
Source: Ambito
