2023-05-23 00:30:00
“Another sacred cow died”, held at the Ministry of Economy. In need of dollars, fearing the impact that a compulsive dollarization of portfolios could generate during the elections and in the midst of a severe drought, Close to Sergio Massa they affirmed that they already have the guarantee to intervene – the amount is not defined – with part of the disbursements that the International Monetary Fund (IMF) will make in Argentina. The official intention is to avoid a new currency run that reduces the chances of the ruling party in the elections and that inflation continues to skyrocket.
Besides, on the fifth floor of the Palacio de Hacienda they are sure that on Monday, June 12 – close to the closing of the lists – they will seal the agreement with the organization led by Kristalina Georgieva. This would lead to what is known in the jargon as the staff level agreement. It is about the agreement with the technical team that follows the Argentine case.
If that were the case, it will be necessary after the fifth review of the Extended Facilities (EEF) Program arrives – after several more internal review steps – at the board (directory) of the body for final approval, which would take two or three more weeks. Only then will the disbursements be made and the details of the agreement that is being completely retouched after the failure to meet the fiscal, monetary and reserve accumulation goals as a consequence, according to Economy, of the drought, will be known.
THE NATION consulted the Fund for the information that arises from Economy, but its spokespersons did not want – as is customary in the organization – to give more details about negotiations that are underway.
Last week, this medium announced that the Argentine authorities and the Monetary Fund were no longer negotiating the amounts of the disbursement, but the percentage of use in intervention. In the last hours, Economy confirmed that, indeed, “The ability to intervene is confirmed.”
Such confirmation is given after last Thursday, Massa decided to let the financial dollars flow for almost $30 to disrupt, according to what was indicated in Economia, “financial curlers” that were children, in turn, of the official intervention in those contributions decided to calm the last exchange run. In the Ministry of Economy they denied that the jump in the exchange rate, which ended up aligning some values of the “free dollars”, had been an explicit request from the IMF to unlock the disbursements and the intervention authorization. Losses from these operations already exceeded US$700 million, according to private estimates.
The possibility of intervening in the exchange market is a problem for the Fund, since it not only wants to collect its debt, but also its statute prohibits financing a sustained outflow of capital with the money lent. In recent weeks, the versions indicated that the IMF was demanding a 30% devaluation to enable the advancement of the debt. Massa, like Cristina Kirchner, oppose a sudden devaluation in the midst of a context of accelerating inflation, which could end the year with an increase of 130% or 140%. These negotiations are the ones that had been delaying the negotiation times between Massa and the Fund, despite the fact that Economy rules out delays.
Regarding the future disbursements of the organization, official sources had already told this medium that the Fund offered an amount that the Economy considered low, arguing that the current one is an election year. Massa claimed the possibility of using 60% of the disbursement. The multilateral organization would be offering 20%.
Massa will travel to China at the end of the month (he will go to Shanghai first and then to Beijing) with officials who are not involved in closing the negotiation with the IMF. The minister is also confident that explicit support will arrive from the group of countries that make up the Brics (Brazil, Russia, India, China and South Africa) to the country and specifically from the Chinese central bank. The Tigrense will seek in that country a renewal and an increase in the currency swap (the freely available tranches), counted.
On June 20 and 21, Argentina has capital maturities with the Fund for close to US$3 billion. If, as they believe in Economy, there is already an agreement at the level of the staff closed, the country (as has already happened) could easily fall behind until the approval of the board arrives. The IMF could then discount the disbursement payment that it must make for 3 billion SDRs (the Fund’s currency), just over US$4 billion.
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