IMF says Argentina in a position to close deal, but will sign when government deems “practical”

Argentina is already in a position to conclude agreement with the International Monetary Fund (IMF), although it will be signed when the government sees fit, they assured the agency, stressing that in recent weeks, there has been “significant” progress in technical negotiation work.

“The work is being done in a very constructive way and very concrete negotiations are underway which put the Argentine government in a position to conclude an agreement when it sees fit. We have a platform of agreement on which we can move quickly as long as it is decided to have a relatively quick agreement.“Alejandro Werner, IMF Western Hemisphere Director, stressed at a press conference.

Despite this progress and the initial intention of the economic team was to close the deal by then, a few weeks ago the idea of ​​the government changed and postponed its horizon for the column after the legislative elections in October. The reasons? Unexpected income from abroad and preference of the ruling party to have a certain freedom of action during the electoral campaign.

On the one hand, the extraordinary revenues from rising soybean prices provide Argentina with unanticipated currency by the economic team which adds oxygen on the external front and in the dollar supply.

Adems, the distribucin de nuevos derechos especiales de giro (DEGs, la ‘moneda’ del Fondo) the dejar in Argentina cerca u $ s 4400 millones that the permitira saldar algunas obligaciones de pago que no poda afrontar sin un acuerdo con el FMI, like the $ 2.4 billion who must be paid to Pars Club or the September and December capital maturities of nearly US $ 4 billion with the Fund itself, although it is not clear whether they can be used for the latter purpose.

On the other hand, the delay in the deal will allow the government to go through the election campaign without committing to adopting measures accelerating budget corrections or structural reforms that could be unpopular in the short term with its voters.

Werner also referred to the Argentine economic situation, currently dominated by new restrictions on certain activities beaten since last year and the inflationary acceleration in recent months.

On measures to contain the virus, the IMF official stressed that growth projections for Argentina this year had incorporated the possibility of a second wave of infections, but not as intense as the current one.

“We will analyze the impact of these measures on Argentina and other countries, clearly represent a downside risk due to the economic recovery“, he said, although it was prudent to give figures because, in the Fund, they find that governments in general were adapting better in taking health measures and in trying to cushion the economic impact.

The latest projections from the agency confirm that Latin America will be the region of the world with the least dynamism in the recovery, after having suffered the most in 2020. This year it will only rebound by 4.6%. , while emerging countries will climb 5.4% and China 8%. “Per capita income will not return to the level before the pandemic before 2024,” they warn of the Fund, and Argentina is not exempt from this drop.

Regarding inflation, which in March is believed to have exceeded 4%, Werner said it is a phenomenon that “causes concern” within the Fund and underlined the predisposition to work together on a macroeconomic plan that helps coordinate expectations and is conducive to a decline. inflation.