Alejandro Werner He was director of the IMP for the western hemisphere during the negotiation of the agreement between The background and the government of Mauricio Macrimanagement that signed a stand by that stipulated disbursements for US $ 57,000 million. Throughout that mandate, finally U $ 44,000 million were turned and the administration of Alberto Fernández He decided to cancel the remaining amounts and agree on an extended facilities program. That agreement had the endorsement of the National Congress, not in its content but in the authorization to carry it out.
Seven years later of the first agreement, the debt with the IMP It remains in force and President Javier Milei decided to authorize the negotiation with the IMF this time by a decree of necessity and urgency (DNU).
According to the IMF via Javier Milei DNU
Werner does not warn risks in this regard because “The IMF does not require that the agreement be ratified in Congress “and because giving voice to the opposition to vote economic policy in an electoral year “is to give it a little smart political weapon for the IMF ”.
In turn, he considers that the fund does seek to guarantee a broad political agreement for the program to transcend the political party on duty, but that “exaggerates the commitments you need“If the agency understands that the measures taken by the Executive in economic terms will be positive. That is why, although he understands that the fund will help the country to take responsibility for an eventual default, the last instance lender “”I should take the political risk that things go wrong. ”
Journalist: Does the government give more signs of a practically closed agreement than those granted by the Fund?
Alejandro Werner: The fund is a more technical institution, does not want to send confusing signs to the markets or to the press about the negotiation point in which they are before having informed him at Board, which is not informed of the day to day, so the last thing they want is that he finds out by the media. The Argentine government, on the other hand, feels the need to send signals to the markets and society.
Q.: Previously, Trump’s influence on the agreement was speculated. Now that he assumed, does the help granted by the United States?
AW: I have always said that the help of the United States will be there. The effort that has been made in Argentina to solve the main economic problem, fiscal unbalance, and also the effort in the deregulatory part is so great that the fund is clearly in a position in which it will support the country, and the United States as well. Not supporting would be a very bad decision. There is clearly a closeness between the Argentine government and the Government of Donald Trump, and more in this context of little predictability, without knowing what Trump has on the Monetary Fund or the World Bank.
Q.: How do you see the financial situation of Argentina from the economic management of a minister who in the past was judged negatively by the IMF? Luis Caputo repeats the 2018 policies or incorporated errors from the past?
AW: Today he has another responsibility, which is that of Minister of Economy, and there, in the fiscal, he has done a very important job. Secondly, I believe that he will also have made some reflection on the power of intervention in the exchange market to solve instability situations, when perhaps the fundamental causes of that instability are elsewhere. And I have seen a prudent position of Minister Caputo with respect to capital controls, being very careful not to say that capital controls must be taken very fast, but first we must fix the fundamental. The fund can have its reservations and say that the minister is this or that, but at the end of the day, in the year Luis Caputo has been very responsible in the fiscal and not withdrawing the capital controls too early. That is why I believe that the IMF is very impressed by its actions.
Q.: The discussions about the possibility of continuing to intervene the exchange market with dollars of the fund still existed and a mechanism for buying dollars of the BCRA is repeated: indebtedness of the private sector from the “Carry Trade”.
AW: I believe that the bottom wants to avoid making very large disbursements that are only used or used to intervene in the exchange market and maintain an official dollar that depreciates 1% monthly in a context in which the exchange balance and the reserves of the Central Bank deteriorate. So, the background will be very careful to that. On the other hand, I think there are important differences with the year 2018, in the sense that Argentina has capital controls, so it has more instruments to deal with a potential output of these dollars that are on the financial bicycle that you mention. In addition, part of this bicycle that responds to money laundering also implies an award for staying in Argentina beyond the differential of interest rates, that the traditional carry trace ‘does not have.
Q.: Despite the good letter, do you inevitable a devaluation? Or enter the aspects to negotiate?
AW: The crucial difference between the IMF and the Government responds to the fact that they are working on a program that guarantees the fund that there will be a movement towards exchange flexibility and that the resources of the fund will be disbursed as long as this greater flexibility changed will be given. I believe that this is a government that, at the time it has to give greater exchange volatility, President Milei will be much less impulsive to try to prevent the movements of the exchange rate. Anyway, I consider that next year Milei will be convinced that exchange flexibility is good and that you have to let the exchange rate move a lot and then return, which is what was not seen in the Macri government. In that government there was a lack of tolerance to this exchange volatility with flexible exchange rate that was seen in other stabilization plans, as was the case of Mexico 94 ‘or Chile.
Q.: What do you think about the strategy of authorizing the negotiations via DNU and not through the legislative treatment of both cameras? Is it viable for the IMF?
AW: The fund does not require the agreement to be ratified in Congress, but it does seek to guarantee a political assurance so that the support of the program goes beyond the party that is ruling. Then, a way to demonstrate this political assurance is to be approved by Congress or that there are positive statements of opposition members on the large guidelines of the program. I think that is a bad fund. If the Monetary Fund is negotiating with a government, you should go ahead, approve, lend the money and then assume if there is a political risk of reversion in the future. If the fundamental fund believes that the measures implemented by the program are good for the economy and the government can re -elected, it is giving a political weapon to the opposition that I think it is not very intelligent that the IMF is that of. Sometimes there are issues that a segment of the political spectrum does not support and the IMF yes, but then they are implemented, it has good results and then the approval of that policy is much broader. However, the fund should take the political risk that things go wrong. So, in that sense, I believe that the fund, when looking for this issue of so wide political support, exaggerates the commitments it needs. That is why I believe that the difference that President Milei decides to go for DNU instead of going for Congress does not make me so important.
Q.: Under the management of Alberto Fernández, the IMF showed some flexibility or benevolence against breach of the goals of the old agreement. Do you think that with Milei they have the same contemplation?
AW: The program lowered the management of Alberto Fernández was only a rollover of the previous program so that Argentina is in force with the fund and not sending it to a default. The first -order decision in the background was logical: we maintain some negotiation power and some influence having a program that if we send Argentina to the default and the last thing we want is to be responsible for that situation. In this case, the background is obviously much more in accordance with the measures that are being taken and would have no problem in making a program where 100% of the maturities will be given to roll and give the white letter to the Milei government in that program. Now, if the program will also have an increase in the financial exposition of the Fund, that is where the negotiation hardens is hardly hardened. A program is not the same where the exhibition is increased as a program where only the rollover is made. Although the IMF rules tell you that both should be negotiated the same, that does not happen, the reality is very different.
Source: Ambito
