IMF: 10 days after the payment of 2,700 million dollars, the government is betting on a rapid definition of the evolution of the reserve objectives

The Ministry of the Economy continued this weekend with negotiations still open with the International Monetary Fund (IMF) to conclude an agreement on the goal review of this quarter, ten days after the first major maturity of the debt with the agency, for approximately $2.7 billion. For this payment, the government should have the disbursement of 5.400 million USDwhich must be approved by the organization’s board of directors.

High-level Palacio de Hacienda sources have indicated in the last few hours that the technical talks are in their home stretchsince they were still discussing final figures and the scope that lens recalibration accumulation of reserves which will be explicit in the programme. There drought, which is more serious than expected due to the new production cut projections, is the main element that determines this final figure.

Between Buenos Aires and Washington, the debates continue virtually, and besides the nice numbers, one of the topics of discussion, even if it is more of a side detail, concerns the way and the time in which a transcendental change in the development of Extended Fund Facility (EFF) than that sought throughout the negotiations.

One possibility, even, was that the official statement was made public this Monday before the start of trading activity, although there was still no official confirmation. International markets have since last week been in a turbulent moment by the fall of Silicon Valley Bank, one of the main banks specializing in the financing of technology startups and there are still fears Systemic risk for the rest of the banks.

However, the debate has dragged on for the past two weeks after the economics team made it known that after the meeting between Sergio Massa and the Managing Director of the IMF Kristalina Georgieva In India, during the G20 ministerial summit, the political leadership of the organization was ready to re-discuss the objectives. After this green light, one of the main topics of debate focused on how to determine, in addition to the new annual and quarterly objectives for the collection of currencies at the Central Bank, the need and the mode of operation of a possible “automatic” mechanism readjustment of objectives according to the pace of exports.

In some official offices, they believe that overseas sales may, after the full impact of the drought in this first part of the year, pick in the second quarter during the months of heavy harvest. Although the reduction in the dollar accumulation obligation should be significant, the final scope will be known with the final report that staff will send to the board for processing towards the end of March.

The statement from the Fund’s technical team will also include a general overview the implementation of the program, beyond the specific discussion on the new scenario of reserves due to the drought and the drop in exports. A lower than expected level of grain sales will imply less export duties collected and less tax revenue.

This variable will therefore have an impact on collection prospects for the first months of the year, an effect which is already beginning to be felt in the official figures for January and February. In the government, they ensure that there will be no modifications in the budget targetseven if compliance with the quarterly primary deficit ceilings will be more in a hurry because the public sector has fewer source deductions.

In January, for example, the Treasury has already “used” more than 40% of the nominal ceiling it has for the first quarter due to an acceleration in late payments at the end of 2022, which caused it to grow by more than 1000% the primary deficit.

In addition, on the tax front, discussions took place between the parties on the cost savings that could have been achieved in the event of full implementation of the grant segmentation to energy prices. In recent days, a new figure has been added to the negotiations: the extension of the payment plan for people at retirement age without the total contributions, which would have a tax cost of 0.36% of GDP in the first year of validity and 0.48% of product in its second year, according to estimates by the Congressional Budget Office (OPC).

The issue of cutting public spending is not a minor one. For the personnel, a complete implementation of the tariff segmentation scheme would imply a tax saving of 0.5% of GDP, i.e. all the difference that the Executive Power must cut this year according to the program (from 2.4% of the Product up to to 1.9%).

The agreement with the IMF and its implications have come back in recent days in the Kirchnerist discourse. In addition to Maxim Kirchner in Avellaneda, which crushed the character of the program signed, the vice-president Cristina Fernandez He also demanded a revision of the conditions, although he assured that his political force does not seek to ignore the debt to the organization.

“If they gave you 45 billion, you’re going to have to give it back, no one is claiming they’re not giving it back,” the vice president said and added, “Economic programs are not a matter of faith, these are objectives that are pursued and the effectiveness and efficiency to achieve them”. “The agreements cannot be the same for everyone. This is what I held, hold and will always hold. I think that it’s important, because they’re going to have to do it, they’re going to have to review the terms in which the agreement was signed,” he said.

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