Global Courant
Economy had announced a trip for the next few hours that has not yet been defined and is expected soon. On Friday, US$1.3 billion must be paid to the Fund.
The last time Sergio Massa came face to face with Gita Gopinath was last April 15. It was at the Spring Assembly of the Monetary Fund. The number 2 of the IMF said that the meeting at the agency’s headquarters had been “good” and acknowledged the “worst drought” in Argentine history. The Economy Minister, in turn, was enthusiastic about a new mission to the US to review the program and even advance disbursements. Today, almost three months later, the negotiation appears without progress.
At this time, Massa’s team is still engaged in virtual chats with the staff, without defining when the chief adviser, Leonardo Madcur, and the deputy minister, Gabriel Rubinstein, will travel. Definitions are expected in the next few hours, they count close to the minister. After paying US$ 2.700 million to the Fund on Friday, Economy announced a trip “early” this week, but in the last hours they reported that it could be tomorrow or later. “They are with that, they will travel when everything is closed,” they said at the Palacio de Hacienda.
The Government urgently needs fresh funds. Since the meeting on April 15, there has been a currency run, inflation has risen 114% annually, and net reserves have reached a minimum level, for which some analysts estimate that they are negative at -US$5 billion. With this limited room for maneuver, on Friday there is a payment for US$1.3 billion to the Fund and on Sunday, another for US$1,000 million to bondholders.
Without dollars or SDRs, the Treasury could postpone payment to the agency until the end of the month, something it already did in June, and use yuan -according to sources in the financial sector- to cancel the interest on the titles that entered the debt swap negotiated by Martín Guzmán in 2020 and that offer semi-annual maturities until 2030. Of the coupons, some US$ 700 million correspond to private and the rest to the public sector, especially the Central Bank.
The Fund already accepted payment in yuan last week, one of the five currencies that IMF members can use and that in some cases they used with the organization. In the case of Argentina, it was the first time, thanks to the swap with China that Massa reinforced in June and that worries the US. Since 2008, the Asian giant has financed 22 developing countries with US$ 240,000 million, 20% of credit allocated by the Fund in the last decade.
In the midst of these tensions, disbursements are delayed. The expectation at this point was to have an advance of US$ 10,600 million, and a more “light” program due to the drought. But the growing deviation from targets and apparent pressure from some board members hardened the Fund, with Argentina’s forecast growth downgraded to 0.2% in 2023 and Gopinath’s visit in May to Massa’s peers in Chile and Brazil. , without stepping on Buenos Aires.
According to sources familiar with the negotiations, one of the sticking points is the disbursement sequence. The staff would be willing to advance dollars, but to increase debt payments. “If you want me to give you more money now, pay me more now,” summed up a man close to Massa. The Fund also demands a devaluation, against which the government would be analyzing a tax on imports that raises the dollar from $257 to $330.
The adjustment in the accounts is another factor of tension. Despite the fact that primary spending has been falling for 11 months in real terms, fiscal redness worsened in the year due to the loss of export earnings. The Government’s intention is to make the commitment to reduce the primary deficit from 2.5% in 2022 to 1.9% of GDP in 2023 more flexible. The technicians in Washington could accept it in exchange for a greater rise in tariffs, a measure that unlocked disbursements with Pakistan.
Unión por la Patria’s challenge is to lessen the impact of these demands on activity and inflation in an election year. Above all, when the minister and presidential candidate seeks to sustain consumption with the freezing of some prices, plans in installments and a relief in Profits, in the midst of the deterioration of formal income and activity, which in April showed a drop of almost 2% monthly, the biggest drop since October 2020.
