Argentina, the largest debtor of the International Monetary Fund (IMF), would need once again to apologize, This time for not fulfilling the objective of accumulation of foreign exchange reserves included in the new agreement for US20,000 million.
It is likely to get it, according to analysts and former officials.
Argentina closed its last agreement with the agency based in Washington – number 23 – in April, to refinance an earlier agreement for US $ 44,000 million and give to the government of libertarian Javier Milei the financial capacity to dismantle the strict capital controls.
The agreement established economic objectives including eliminating the fiscal deficit, a decrease in the inflation rate and the reconstruction of the exhausted currency reserves of the Central Bankwhich were in red numbers when Milei assumed the position at the end of 2023.
The Government has managed to slow inflation with harsh austerity measures and has guided the country to Leaving an economic recession but it has been more complicated to accumulate reservations, which would be below what is required by the IMF.
However, former officials of the country and IMF said that Milei had done enough to gain some margin of maneuver, And that the spending cut managed to reverse years in which the country had an important fiscal deficit, conquering the support of the markets and obtaining the applause of IMF leaders.
“I think they will forgive it (breach of the reservation goal) even if they ask for more later,” Claudio Loser told Reutersformer director of the IMF for the western hemisphere.
This would probably be specified in a “forgiveness” (or Waver for its expression in English), approving the first program reviewfor which a technical team of the agency arrived in the country on Tuesday.
Daniel Marx, former secretary of Argentine Finance Between 1999 and 2001, he told Reuters that the next disbursement, of about US $ 2,000 million, would require the forgiveness of the IMF.
“Most likely, the disbursement is not automatic, but requires a waver”said Marx.
“It was thought that the Central Bank was going to intervene (in the change market) accumulating reservations. This did not happen, at least so far. I guess they will say how they plan to face in the coming months, more than anything, from here to the end of the year. “
The Ministry of Economy and Presidency did not respond to a request for comments. The Central Bank declined to comment and said that conversations with the IMF technical team were barely starting.
A key factor for the “waver” is Milei’s solid history in terms of reducing public spending to eliminate fiscal deficit.
Last week, the government announced that it would deepen the adjustment to reach a 1.6% surplus goal.
The Minister of Economy, Luis Caputo, said at the beginning of the month that the accumulation of reserves was no longer as important as beforewith a greater flotation of the peso and a capitalized central bank and highlighted the IMF’s support for Milei’s reforms.
Aldo Abram, director of the Freedom and Progress Foundation in Buenos Aires, estimated that the country could be between US $ 500 and US $ 1 billion below the agreed reservations goalbut that should not block the disbursement of new funds.
“This government has demonstrated great financial skill to solve problems. It may happen that We are US $ 500 million or US $ 1 billion below (of the reservations goal), they will not make big problems in the background, “Abram said.
“I think the fast forgiveness will be approved and that a week or two disbursement can be delayed,” he added.
