The Government wants to do inflation converge at the pace of devaluation. It’s the plan. This was made known to the IMF again in recent days.. For this you need dollarsbut more precise is that the recession continues to do its thing. And of course, it will also be necessary to avoid a devaluation.
The financial summer leveraged by laundering, the residual liquidation of exports, the carry trade sponsored by the decline in the price of financial dollars It is a relief for the minister Luis Caputothat in the last hours allowed him to play the card that had been anticipated in this column and that his own IMF He warned the economic team last week: it is not necessary, the minister said over the weekend, to close an agreement with the international credit organization in the short term.
And although, according to analysts, this “summer” does not clear up doubts about the last quarter, especially because the reserves continue to be insufficient, the movements in Washington by the Argentine representatives before the IMF continue, while in Buenos Aires It “sells” a sweetened version of the economic present and the lack of urgency on the financial front. The fact to keep in mind is that on the Argentine side, work continues in the US capital to bring positions closer together and have a draft prepared that does not stray too far from what the IMF staff requires to submit it to the board.
Have a draft before the US government changes
The Government thinks that it should have the set of goals of the new program as advanced as it can. He needs to validate it with the IMF staff, whom the Treasury Department has called several times in recent days to find out the progress. On the Argentine side, they have set a “deadline” that they are not sure they can meet: They want to close something resembling an agreement before the authorities in the United States change after the presidential election.
The elections are next November 5th and it is assumed that, Kamala Harris or Donald Trump winnumerous changes of officials could be reflected in the most sensitive positions in the State Department and the Treasury, both influential in the approval of a new agreement with Argentina, via the IMF board. The date on which the new administration will arrive at the White House It is January 20, 2025.
Of course there are several drawbacks, above all, what the IMF -yes or yes- he is going to ask him to oxygenate the amount of dollars he can inject into the country. As said, finished the program between Argentina and the IMF at the end of the yearthe Government publicly flirts with the strategy of remaining without a program with the organization for much of 2025, to resume repaying the loan – under the new conditions – in 2026.
As Ámbito was able to confirm, the IMF views this strategy favorably and is willing to accompany, with conditions, this decision, although it does not guarantee that the Casa Rosada will be exempt from pressure from the market.
Without “new money” it is easier, but it distances the exit from the stocks
There are some elements that strongly influence the decision-making system so that the organization is willing to accompany, with reservations, this decision: first, President Javier Milei would not be in a position to make the necessary changes requested by the organization in exchange for “new money”, within the framework of the new program with the IMF, which Argentina should subscribe to refinance its debt with the institution led by Kristalina Georgieva.
As Ámbito was able to reconstruct, the Government let the agency know that the priority in the coming months will be to maintain inflation at levels considered “low” for the series that started with 25% monthly inflation in December 2023, which it marked in August 4.2% and that in September it could be below that mark.
The IMF considers that it is a priority to respect the zero deficit and aim to make more significant and “better quality” changes in the structure of public spending. Related to the latter, the organization is aware that the Government needs social support to reach the midterm elections in good shape.
Ultimately, they think that President Milei could eventually go through 2025 without a new Extended Fund Facility (EFF), something that, if done, would put the Government under the obligation to render accounts every three months, not easy in an election year.
Another fact to keep in mind is that the IMF thinks that this program should be an Extended Fund Facility (EFF) due to the temporary extension that Argentina needs to repay its debt. However, In the event of an eventual interregnum – the current program reaches its expiration and a new program is not subscribed – Argentina could take on debt from a consortium of banks or using BCRA gold sent to London, without consulting the IMF.
That is, by not having a current program, Minister Luis Caputo could take on debt to meet his 2025 commitments and aspire to reach the end of the year with a negotiation underway that allows him to enter 2026 with an injection of more money from the IMF.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
