The International Monetary Fund announced this Monday that
the reserve accumulation goal established in the original program with Argentina was relaxed
, a measure that will give the Government a breather in an electoral year, which saw it impossible to meet the initial objective due to the drought and the least activity.
In addition, he called for the accelerated reduction of energy subsidies, especially for the more affluent sectors.
In addition, the Fund's technicians said that the objectives were met and they gave the go-ahead for the disbursement of some
US$5.3 billion (4 billion SDRs, the IMF currency).
In a statement released in Washington, the Fund highlighted the drought as the main reason for reviewing the program's reserve goals.
“While stronger macroeconomic policies and efforts to ensure improved reserve coverage and reverse recent foreign exchange losses are expected, a modification of the net international reserve accumulation target for 2023 is called for. This will partially accommodate the impact of increasing drought, while taking into account the offsetting effects of lower energy import prices and agreed policy measures.
Most of this accommodation is requested to be done by early 2023, consistent with the anticipated impact of the drought."
The Fund's statement does not speak of numbers, but from Economy they indicated that a new reserve accumulation floor had been established for March, June, September and December, reducing more than 3,000 million dollars to accumulate in March and almost 2,000 million
to end of 2023.
Regarding the fiscal deficit, the IMF said that "the authorities are committed to reaching the primary fiscal deficit of 1.9 percent of GDP in 2023 through continuous spending controls, better targeting of energy subsidies and social assistance , and better prioritization of capital spending, while protecting priority social and infrastructure spendingW
And he stressed the need to reduce subsidies.
And he stressed the need to reduce subsidies.
"To meet the deficit reduction goals and strengthen the progressivity of energy subsidies, the authorities plan to continue implementing the agreed segmentation scheme, eliminating subsidies for higher-income residential users"
Prudent macroeconomic management in the second half of 2022 supported stability and helped with some margin to secure program targets through the end of 2022.
Against a more challenging economic backdrop, particularly the increasingly severe drought, stronger policy actions are needed to safeguard stability, address rising inflation and policy setbacks, and maintain the program's anchor.
In this context, revisions to the reserve targets for 2023 are requested.
The IMF announcement came after weeks of tireless negotiations in Buenos Aires and Washington between a mission from the Economy Department –Gabriel Rubinstein, Leonardo Madcur, Raúl Rigo and Lisandro Cleri—with Fund technicians –Luis Cubeddu, Ashvin Ahuja and others—who they discussed the details of the numbers.
Earlier, at the end of February, Minister Sergio Massa had begun the political process at the G20 summit in India, where he met with the IMF Managing Director, Kristalina Georgieva, the international adviser to the US Treasury, Jay Shambaugh , and ministers from other countries with weight in the executive board.
Massa then announced that he had agreed to modify the reserve goal, but the process that he said was imminent took longer than expected due to the fine recalculation of numbers and the agency's bureaucracy.
Economy summarized that there were 140 hours of zoom between the technicians and several high-level meetings.
The new goal must be officially endorsed by the body's board in a session in mid-March, but it is estimated that the political field has already been cleared for endorsement to be granted.
According to the original program signed last year, the Government should have some US$7,800 million in the Central's coffers by the end of March, 11,000 in June and some 12,125 by the end of 2023, something that now seems impossible to comply with because the Government estimates that the losses from the drought will be between US$15,000 and US$20,000 million, added to the daily losses of dollars.
In a statement, the Fund said The debate on the relaxation took place in the framework of the fourth review of the program, which was approved.
The goals for reserves, fiscal deficit and monetary issue were met in the last quarter of last year and for this reason, when the Fund's board approves it in a few weeks, US$5.300 million will be released.
But, as usual, the technicians also reviewed the path forward and this year the numbers of accumulation of reserves did not close.
Due to the drought that hit the harvest, the war in Ukraine, the various stocks, the dollar gap, an economy that will grow less this year and the government's refusal to devalue at a higher rate, the Central Bank did not accumulate dollars as had been expected. calculated in the initial program.
Until now, certain creative accounting and gadgets such as the “soybean dollar” had been used, which the Fund tolerated with waivers (pardons) in order to keep the program running.
But this is no longer enough because there is not enough soybean to liquidate.
With a more comfortable reserve target, the Government will not need waivers and will be able to avoid major shocks with the exchange rate in an election year.
The way is also paved to achieve two more disbursements that are already scheduled before the PASO elections in August and the presidential elections in October.