For the first time in history, Argentina paid the IMF a maturity of some US$ 2.7 billion this Friday using the yuan agreed with China, as announced by the Ministry of Economy.
It is an atypical situation that clearly shows the difficulties that the country is going through to generate dollars. basically due to the cold export dynamics and the impact of the drought in the countryside.
The IMF formally recognized the payment through a statement and described the Argentine situation as “challenging”.
“Technical discussions are on a package of policies to save economic stability, in the context of a challenging situation, partly affected by the historic drought,” said Julie Kozack, Director of Communications at the IMF. And she clarified that “the discussions are focused on strengthening macroeconomic policies to support reserve accumulation and improve fiscal sustainability, while protecting the most vulnerable.”
The Treasury aspires to obtain fresh funds before the PASO but there are doubts about the use
With this scenario, next week the head of Advisors, Leonardo Madcur; and the Vice Minister of Economy, Gabriel Rubinstein, will travel to Washington to convince the technicians of the international organization of the need to obtain an advance on the disbursements that the economic cabinet originally calculated at 10 billion dollars but that as the magnifying glass progresses IMF technique on local fiscal accounts is deflating in its claim. Sources close to the Palacio de Hacienda considering that, at this point, five billion dollars would be considered a success.
According to market sources and analysts close to the discussions in Washington, the Fund has reservations about approving a large outlay that could evaporate in keeping the dollar under control amid the electoral explosion.
As PROFILE has been advancing, so far it has not been confirmed that the minister (and presidential candidate of Unión por la Patria) will join the mission. It is not clear how much the double condition of the head of Economy adds or not, from the perspective of the IMF, in the renegotiation of the agreement, since it is discounted from Washington that the next government (whatever it may be) must fully renegotiate the entire agreement.
Given the lack of dollars in the Central Bank, the Government had already indicated that it would use US$1.7 billion in special drawing rights (SDRs, the IMF currency) and the rest would be yuan that comes from the swap with China, part of the US $10 billion that you have freely available.
Sergio Massa, who has just finished his first week as economic helmsman and candidate for the ruling party, will now focus on his next steps in sustaining the slowdown in inflation with a thunderous monthly floor of 7% and for this reason he is betting on extending the price freeze and to reactivate consumption.
Another mission will be to strengthen currencies. In that direction, it launched benefits for the winter holiday season. “We have to beat the historical record of foreign visitors in these winter holidays in Argentina,” she said. “Tourism is an industry that permanently generates employment. And those dollars that we aspire to collect with that season to record will be used for two very important things: try to alleviate the drama that in macroeconomic terms the drought left us, which was US $ 20 billion, ”he emphasized.
On the other hand, the economic team also highlighted this Friday that the production of unconventional gas from Dead cow reached some 57.3 million cubic meters in May, which represents an interannual increase of 10.7% and a growth of 11.1% compared to April, according to calculations by the Ministry of Energy.
The energy savings from the start-up of the Néstor Kirhcner Gas Pipeline also represents an objective that, from the official perspective, will aim to de-stress the demand for dollars to import foreign currency income from energy exports.
Versions about Boudou and the negotiation
Both the IMF and the BCRA ratified this Friday the 30th, in both press releases, the payment that was made official to the Fund for a total of 2,700 million dollars using the Chinese swap.
There was a curious fact in the market that came from the mouth of Leopoldo Moreau in radio statements. He confirmed that former Vice President Amado Boudou, sentenced in 2018 to 5 years and 10 months for the Ciccone case and disqualified for life from holding public office, “works” in the discussion with the IMF. “Our political force has said that the agreement with the Fund will have to be reformulated. In this sense, Massa has agreed to it and Boudou is working with the Minister of Economy”, Moreau specified in statements to AM750.
In the Ministry of Economy they denied that participation in the discussions.
