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 of the agreement with the International Monetary Fund, 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 UBA report comes in the midst of negotiations between the government and the fund, to convince the board of the agency that, given the critical lack of foreign currency that the country is going through, it will advance to June the disbursements of US $ 10,000 million expected from June to the end of the year.
The CENTRO RA de Estudios para la Recuperación de la Argentina has as president of the Council the radical deputy Emiliano Yacobitti and makes 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, which is linked to monetary issuance.
The first quarter target 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 missed by a surplus of $ 248,428 million (remaining 56% above the proposed maximum).
Among the most relevant items of expenditure, those that grew the most were Capital Expenditure (37% in real terms, discounting inflation) and Other Programs such as Progresar y Potenciar Trabajo (66% real).
On the other hand, among the items that showed contractions, are Family Allowances that fell by 43% real year on year, Pensions, with a real decrease of 7%, Energy Subsidies (-45% real) and Transfers to Provinces (-19% real).
In addition, the floating debt of the national government (difference between accrued and paid expenditure) 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 quarter.
The second parameter is income in real terms. The agreed goal was $ 2.6 billion and $ 2.3 billion was reached. A default of $ 319,000 million was generated (12% below the proposed minimum).
The third parameter is linked to monetary issuance. The agreed goal is $139.300 billion, while the actual issuance was $130 billion.
The goal was reached with a margin of $9.300 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 for financing expenses," the text says.
However, in March $ 130,000 million were transferred, 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 emphasizes that "it is worth mentioning that this goal only contemplates financing operations for Transitory Advances and Transfers of Profits."
In practice there are other operations by 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 were also considered (to sustain the yield curve and thus facilitate the placement of Treasury securities), the total issued during the first quarter of 2023 would have amounted to about $ 535,000 million (0.3% of GDP).
"Naturally, the counterpart of this injection of currency is the increase in the debt of the BCRA (Pases and Leliq) to the extent that the public rejects those pesos issued," the report says.
The biggest breach is in the reserves target. Although it had been agreed with the IMF in March to lower the original reserve accumulation target from $5.500 billion to $1.900 billion, the government failed to meet it.
At the end of the first quarter, "the accumulated effective reserves compared to December 2021 resulted in US$ -467 million (134% below the agreed minimum)".
With the negative net reserves, "a breach of the target of US$ 2,547 million (US$ 6,147 million compared to the original target) was generated".
AQ
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