At a time when the Government is waiting for the disbursement of the Monetary Fund, the organization issued a strong warning to the government of Javier Milei in relation to the increase in poverty, the value of pensions, the fiscal and monetary level, which It would postpone–in the best of cases–that anchoring. The organization’s board of directors delays the approval of the eighth revision, which in technical terms had been approved in greater, for the sending of 800 million dollars and avoids talking about a new program.
The IMF’s tone towards Milei’s Argentina generally alternates praise with warnings. But, this time, praise was practically absent in the press conference given by the organization’s spokesperson, Julie Kozack, to which she had access The uncovering Among the warnings, it stands out that monetary and exchange rate policy will need to evolve to anchor inflation and safeguard further improvements in reserve accumulation and coverage“while containing any market pressure.”
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The growth of credit in dollars and the records of foreign sales affidavits (DJVE) also raise some warning signs. Credit in dollars grew by 2.7 billion dollars between March and the end of May (70 percent). “The impact of private debt in dollars on the international reserves of the Central Bank is ambiguous.” points out the report of the Development Research Foundation (FIDE).
Although the net sale to the BCRA of foreign currency from the debt totaled 1,199 million dollars in March and April, the fall in the reserve requirements that the lending banks have in the BCRA generated a decrease of 1,225 million in the same period. The DJVEs, for their part, continue to reflect caution on the part of exporters.
Soybeans do not appear
In April and May, soybean affidavits represented 17.4 percent of estimated annual production (50 million tons), considerably lower than the 29.4 percent recorded for the same period in 2023, although higher than the 13. 5 percent of 2022. For all of 2024, the tonnage of soybeans and byproducts registered in the DJVE is equivalent to 29 percent of estimated production. This figure reflects that exporters are expectant and are in no hurry to export production.
“Argentina exceeded the goals agreed upon with the IMF for the first quarter, corresponding to the Agency’s eighth review. This enables, once approved by the Executive Board, the disbursement equivalent to approximately 800 million dollars (SDR 600) to be made. million)”, details the FIDE document.
In terms of net reserves, the commitment was to accumulate 6,000 million dollars in relation to the level in force on December 10, 2023. At the end of March it had accumulated about 8,800 million. At the fiscal level, the goal stipulated a primary surplus of 962 billion pesos and the surplus achieved exceeded 3.8 trillion pesos.
“The zero financing goal for the Treasury was also overmet in the first quarter, given that the cancellation of the debt by the Treasury was greater than the purchases of BCRA public securities in the secondary market (negative net financing by about 1.5 trillion pesos). In the remainder of the year, Argentina faces maturities of 2.8 billion dollars with the IMF and would receive (counting the disbursement corresponding to the eighth review) about 1.9 billion dollars,” the report anticipates.
“From a broader perspective, debt paid in pesos increased 162.1 percent in March compared to the same month of the previous year. For its part, liabilities in dollars increased 980 percent for the same comparison period,” points out a study of Economic and Social Reality Study Group.
The next demands
The second quarter goals that, if approved, would enable a disbursement of $530 million in August (SDR 400) generally appear achievable: accumulation of net reserves of $9.2 billion over December 2023 values, surplus primary of 1,925 billion pesos and zero financing to the Treasury. In terms of economic policy, in the statement the Fund noted that the commitment to achieving global fiscal balance remains unchanged, but highlighted the need to improve the quality of fiscal consolidation, including the progressivity of the tax system.
In relation to exchange rate policy, he noted that it will become more flexible, reducing exchange controls “as conditions allow”, but without setting any time horizon to achieve it, unlike the Staff Report published in February within the framework of the seventh review of the program, in which he had raised the need to eliminate the blend exporter (20 percent settlement to the CCL) no later than June and discard any differentiation policy or exchange restriction before the end of the year.
Nor did he mention the exchange rate appreciation process, when in February he had highlighted the need to maintain a competitive exchange rate. According to the Fund, the liberation of exchange controls is part of the transition to a new monetary regime, which involves currency competition. “It is not entirely clear what this model would imply. It could consist of the elimination of the stocks and a floating exchange rate regime (like many Latin American countries) or the regularization of the dollar as legal tender, along with the elimination of the possibility of issuing pesos for any concept.
“However, in this context not even the first option seems viable. Added to the difficulty of accumulating reserves is the appreciation of the real exchange rate implied by the crawling peg 2 percent, which increases the risk that the lifting of controls will generate an abrupt exchange rate jump. In this scenario, it is not clear what the Government’s roadmap is to dismantle controls, both on the financial and official dollar markets,” the document concludes. It is not clear for the Fund, for the banks or for the financial companies. .
