2023-08-15 22:58:55
Economy Minister Sergio Massa will travel to Washington next week to hold meetings with authorities from the International Monetary Fund (IMF) and negotiate an extension of disbursements, according to sources from the economic portfolio.
A spokesman for the Palacio de Hacienda confirmed the trip to the Télam agency, and anticipated that Argentina “seeks to negotiate” an extension of the disbursements, to some 10.5 billion dollars, instead of the 7.5 billion dollars that the government plans to deliver. IMF, to swell the reserves and be able to intervene in the financial exchange market.
On Monday, after the organization’s activities resumed after the summer recess, the IMF’s Director of Communications, Julie Kozack, recalled that on July 28, “the Argentine authorities and the IMF technical staff reached an agreement at the level of technical personnel on the fifth and sixth revisions within the framework of Argentina’s 30-month Extended Facility Agreement (EFF)” and that this matter will be analyzed by the board of directors next week.
“The agreement is subject to the approval of the Executive Board of the IMF, which is expected to meet on August 23 to approve the agreed disbursements,” completed the agency’s spokesperson.
“We value the authorities’ recent policy actions and commitment to safeguard stability, rebuild reserves, and strengthen fiscal order,” Kozack added.
Devaluation
The day before, almost in line with the opening of the market, the Central Bank devalued the peso by 20% and brought the value of the official dollar to $365.50. In addition, it raised the monetary policy rate by 21 percentage points to 118% nominal per year, which would provide an effective monthly rate of 9.7%.
At the end of last July, the national government and the IMF reached, after more than three months of negotiations, a technical agreement to reformulate the current program, through which it was established that Argentina will receive a disbursement of 7,500 million dollars, nor well the board of directors ratifies the technical understanding.
The new agreement incorporated the impact of the drought, and in particular there was a significant relaxation of the reserve goals, since the requirements went from 8,000 million dollars of net accumulation to 1,000 million dollars, for all of 2023.
“The understanding provides for a disbursement of 7,500 million dollars in August and another in November, and that the Fund approved the powers to intervene in the markets to ensure their normal operation,” the IMF and the Palace of Finance reported jointly, to the make understanding known.
On that occasion, the agency specified that after the agency’s board of directors approves and considers the fifth and sixth reviews formally completed, Argentina will have access to around 7.5 billion dollars.
While the next review – the program’s seventh – is expected to take place in November.
In conversations with the IMF, the Argentine government managed to reformulate some of the goals of the program, particularly the one referring to the reserve goal and partially advance the disbursement schedule by a few months, despite the fact that the objectives were not met originals.
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