Global Courant 2023-05-22 23:07:57
According to a study by Centra RA from the Faculty of Economic Sciences, for the first time since the agreement was signed, there were breaches.
According to an index prepared by the RA Center of the Faculty of Economic Sciences of the University of Buenos Aires, in this first review of the year by the International Monetary Fund on the goals set forth in the agreement, Argentina did not reach the agreed goals.
“The qualitative conclusion of the report regarding Argentina’s goals in the agreement with the IMF is disapproved. On average, for the period under analysis, our country did not meet the goals by 43.91%,” the report states.
The CENTRO RA Estudios para la Recuperación de Argentina has as president of the Council the radical deputy Emiliano Yacobitti and produces various reports on economic issues.
In this survey, the RA Center measures four parameters of the agreement with the IMF and rules that only one was met, the one linked to the monetary issue, although it warns of the negative effect of the increase in Leliq’s debt.
The goal for the first quarter established a primary deficit of $441,500 million (equivalent to 0.3% of projected GDP), while this accumulated $689,928 million at the end of March 2023 (0.4% of GDP) based on official data.
In this way, the goal was breached by a surplus of $248,428 million (remaining 56% above the maximum proposed).
Among the most relevant expenditure items, the ones that grew the most were Capital Expenditure (+176% annual; +37% real) and Other Programs such as Progresar, Potenciar Trabajo, among others (+235%, +66% real).
On the other hand, among the items that presented contractions, are Family Allowances that grew only 15% per year (falling 43% real year on year), Retirements 88% per year (-7% real), Energy Subsidies 11 % annual (-45% real) and Transfers to Provinces 63% annual (-19% real).
In addition, the national government’s floating debt (difference between accrued and paid spending) amounts to 1% of GDP at the end of March, equivalent to $1.7 trillion, while the agreement with the IMF establishes a maximum of $1.2 trillion for the first trimester.
The second parameter is income in real terms. The agreed goal is $2.6 trillion. In this indicator, the value reached was $2.3 trillion. The goal was missed for $319,000 million (12% below the proposed minimum).
The third goal is linked to the monetary issue. The agreed goal is $139,300 million, while the effective issuance was $130,000 million.
The goal was reached with a margin of $9.3 billion (7% below the proposed maximum). During the months of January and February, there were no direct transfers from the Central Bank to the National Treasury to finance expenses. However, in March $130,000 million were transferred, being the only transfer, which remained within the limits set by the IMF. In this way, “this is the only goal of the agreement that has been able to be met in the quarter.”
The text highlights that “it is worth mentioning that this goal only contemplates financing operations through Temporary Advances and Transfers of Profits.”
In practice, there are other operations through which the Central Bank can issue money with the intention of financing (directly or indirectly) the Treasury. Therefore, if interventions in the secondary debt market are also considered (to support the yield curve and thus facilitate the placement of Treasury securities), the total issued during the first quarter of 2023 would have amounted to around $535,000 million (0 .3% of GDP).
“Naturally, the counterpart of this injection of currency is the increase in the BCRA’s debt (Pases and Leliq) to the extent that the public rejects those issued pesos.”
The greatest breach occurs in the reserves goal. Despite the fact that in March an agreement had been reached with the IMF to reduce the original reserve accumulation target from US$5.5 billion to US$1.9 billion, the government failed to meet it.
At the end of the first quarter, “the accumulated cash reserves compared to December 2021 were US$ -467 million (134% below the agreed minimum).”
In other words, reserves were lost with respect to the end of 2021, resulting in a negative accumulation (loss). This translates into “a breach of the goal of US$2,547 million (US$6,147 million compared to the original goal).”
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