:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/GE7SWPG6NRCSTHSB236FZJZ6WE.jpg "IMF agreed with Argentina to disburse .2 billion in March and would modify reserve targets for 2023")
After two meetings between Sergio Massa and Kristalina Georgieva in Bangalore (India) and more than 140 hours of zoom between the Ministry of Economy team in Buenos Aires and the staff of the International Monetary Fund (IMF) in Washington, Argentina achieved a disbursement of $5.2 trillion in March and a substantial change in the Central Bank’s reserve target for 2023 following a severe drought.
The disbursement of 5.2 billion dollars is a consequence of the achievement of the objectives agreed with the IMF for the last quarter of 2022. These objectives are linked to the budget deficit, the monetary question and the reserves of the Central Bank. The Fund’s Board of Directors will meet next week to validate the staff level agreement which will be out in a few hours.
Massa decided to travel to Bengaluru (India) to meet Kristalina Georgieva and explain to her that the drought in Argentina and the economic consequences of the war in Ukraine had affected the inflow of reserves to the Central Bank. The head of the Palacio de Hacienda and the managing director of the IMF met twice as part of the G20 summit, and there they agreed to modify the reserve targets set for 2023.
Ahead of the new deal to be announced today in Washington, Argentina promised to bring in $5.5 trillion in the first quarter of this year. An unattainable figure due to drought and conflict in Europe.
The Rosario Stock Exchange (BCR) last Wednesday lowered its estimate of the soybean harvest for the 2022/23 cycle to 27 million tons, against 34.5 million previously estimated, and reduced its forecast for next year to 35 million tons of maize, from the 42.5 million it had announced in February.
These devastating figures imply a loss for the producer of nearly 14,000 million dollars in soybeans, corn and wheat with its immediate consequence in the flow of Central Bank reserves. Massa explained this unprecedented situation to Georgieva and the technical teams of Economy repeated the same arguments with IMF staff.
Yesterday afternoon, finally, the small print of the consensus was defined which alleviates the objective set for the reserves of the Central Bank in 2023.
In addition to explaining to Georgieva the consequences of the drought, Massa presented the general manager with a paper of the Palacio de Hacienda which accurately describes the impact of the war in Ukraine on the extraordinary influx of foreign currency that Argentina had to make.
“The war in Ukraine caused significant changes in the global economic scenario, which generated a negative effect of $4,940 million on the trade balance. which is attributed to a general shock of international prices in the agricultural sector (soya 9.4%, wheat 33.7% and corn 17.8%) and on the price of fuels (Bolivian gas 114%, LNG 233% and Diesel 85%)”, reveals the report on the cost of war prepared by the Ministry of Economy.
Georgieva opened her hand regarding the booking goal, but then demanded specific action to end the energy subsidy system that benefits high-income households. The director general made this declaration during her last meeting with Massa, and the Minister of the Economy promised to settle this file in the coming months.
In conclusion, IMF staff will announce today that a disbursement of $5.2 billion will be formalized before the end of March, that the Central Bank’s reserve target for 2023 has been changed and that there will be strict control of energy subsidies to avoid affecting the budget deficit target.
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