Dollar: Government requests IMF authorization in case …

Pressured by the market, the Treasury Palace will seek the authorization of the International Monetary Fund to increase its foreign exchange intervention capacity. The inability of the fiscal and monetary tourniquet to contain the new dollar's rise is prompting the economic team to consult the multilateral organization to implement the policies that had been banned after the signing of the Stand-By Agreement. As part of his trip to the United States, Minister Nicolás Dujovne will be received tomorrow in Washington by IMF head Christine Lagarde. The meeting is the prelude to the Fund's Board meeting where the fourth disbursement of the agreement will be authorized for more than $ 10,800 million. The meeting to badyze the case of Argentina will only take place in two weeks. The Ministry of Finance hopes that the representatives of the member countries will agree. When the disbursement is completed, Mauricio Macri's government will have received 68% of the loan in just twelve months.

The adjustment and reform program initiated by Argentina to access the IMF loan limited the degrees of freedom to implement economic policies. Any change resulting in a waiver of the terms of the agreement requires authorization from the multilateral organization. The planned increase in the universal allocation for children announced by President Macri is part of this logic. The increase in expenditures was consulted during the last mission of the Fund, as it requires an additional investment to that which would have been necessary to finance the increases that the new mobility formula will produce in 2019. The human face of the Austerity agreed with the Fund is the possibility of increasing social spending in the event of a crisis.

The renewed turbulence forces the Treasury to obtain the authorization to modify the administration strategy of the stock exchange and the financial market. Just two weeks ago, the government successfully introduced the reduction of interest rates and exchange rate stability. However, the financial tranquility highlighted by the authorities was abruptly exhausted without any local or international disruptive event. Yesterday, a further increase in demand for dollars forced the Central Bank to produce a further rise in the interest rate. The measure did not prevent the rise of 26 cents from the quote, which reached 42.52 pesos in the banks and exchange offices of the city of Buenos Aires. Within the limits of its limited margin of action, the BCRA has doubled Leliq's daily offer to average 62.11 per cent between the two auctions (see annex).

It is not a matter of advancing the regulation of short-term capital movements that were dismantled at the beginning of change management, but expanding the margin of action and limiting volatility excessive which today allows the scheme of free floating between the bands. "We have a surplus of dollars in dollars that we will have to convert, we have not yet defined when we are going to start, it will be a very stable process, very well advertised in advance. We are not yet able to announce, "said Dujovne yesterday, citing one of the mechanisms he will use to try to contain the volatility of exchange rates. The statements were made in front of the Econojournal portal as part of a tour to the United States that met yesterday with US Secretary of Energy Rick Perry. The Argentine official will arrive today in Washington where he will be received by the head of the US Treasury, Steven Mnuchin. And tomorrow the meeting with Lagarde is planned.

The next installment of credit with the IMF is scheduled for mid-June. The fifth disbursement totals approximately $ 5390 million. A new mission of the organization will return in the country in May. They will badess the achievement of the first half's fiscal, monetary and currency objectives. The arrival of resources will also depend on the implementation of a set of "structural reforms" included in the IMF's permanent program. The authorities of the organization fear that an election defeat of Cambiemos will block these initiatives. From the palace of the property, they badure that the IMF recognizes the difficulties that represent an electoral year to impel the reforms. The planned commitment in the agreement is to present preliminary drafts aimed at reforming the BCRA's organic charter and advancing pension reform.