The agreement with the International Monetary Fund: Doubts about the anchor, fear of “lack of control”, and a demand for basic measures

No news for anyone looking at the exact numbers: The government was on the verge of breaching the objectives of the agreement with the International Monetary Fund (International Monetary Fund), even before the worst drought figures were confirmed. With dry buds on the table, the only anchor for reducing inflation was not entirely clear. in this context , Economic decision makers require basic measures to stabilize the economy and political consensus to be able to implement in the midst of the electoral process..

Economists assert that the drought has clearly caused a real impact on the central bank’s reserves and tax revenues, which will enable a review of the expanded facilities program with the Fund. however, They warned of the negative consequences of opening the way to the new “Platita Plan” in the run-up to the presidential elections this year.

“There has been a drought this year and the harvest will not be good, we have known this since last December,” said Gabriel Camaneo Gomez, an economist from Ledesma. We know that the harvest has been well below 40 million tons (soybeans) since the second week of February. And since the beginning of March we know that 25 million tons is a ceiling. Nothing happening now is new. The economic program should have been corrected long ago. Interrogate the specialist.

The problem here is that the goals will never be achieved. The fiscal deficit will not be achieved; Reserves either because you mortgage this year to meet last year. In the first quarter, the financial target hasn’t been met and the drought hasn’t hit there yet, which is the most comfortable (quarter). “It will not be achieved in the whole of 2023. Drought will be an excuse for the whole year now,” he asked, and said that the program itself could not be “achieved” by this government.

“Due to the impact of the drought, the March target has already been lowered. But the financial and monetary are not affected. If it is due to a drought effect, there are arguments for lowering the tax, since deductions have lost one point of income. You can go from a deficit of 1.9% to 2.9% of GDP this year.” explained economist Fernando Marol, who noted that the fund could also ask for further adjustments in social plans or rates.

“The point is, it’s because of the drought and not to make a pre-move plan. If they spend it there, it’s going to have a negative impact. If it is only due to dehydration, the effect will be shortened, ”continued W He warned that the target of cutting reserves last month by $2 billion for this year will not be met.

Due to the impact of drought, the government and the IMF will once again reset the economic programme. Sources from the economic team after the meeting indicated that Economy Minister Sergio Massa and Deputy Managing Director of the International Monetary Fund Gita Gopinath held yesterday in Washington “everything is on the table.”

Good meeting with Minister Sergio Massa. We talked about the impact of the worst drought in the history of Argentina and promised to continue working closely to strengthen the program in the face of this difficult scenario.”

“The impact of drought and other climatic phenomena has not only affected agricultural and livestock production, but also regional economies and their value chains,” he said. NationDaniel Funes de Rioja, President of the Argentine Industrial Confederation (UIA).

“So, if we add to this the tightening exchange restrictions, as well as the unresolved macroeconomic conditions, Clear fundamental decisions are required to reconcile the goals of macro stabilityReversing the structural causes of inflation and effective management of public spending, with the simultaneous promotion of measures that restore predictability and confidence for productive investment and generate real job opportunities, ”warned the head of the industrial entity.

We cannot ignore the crisis, but rather assume it Confronting them by seeking and reaching the necessary consensus to work on them. It’s time to do it,” Funes de Rioja stated.

“In the face of such an exceptional situation, such as a drought, with the shortage of foreign currency that this would mean, it seems to me that it was necessary to try to reach new negotiations with the fund to make our commitments more flexible. From this point of view, it seems very reasonable. said Mario Greenman, President of the Chamber of Commerce (CAC), in a consultation with him Nation.

“The drought is clearly an important factor in achieving the goal of reserve accumulation previously agreed upon with the IMF, which is impossible to compensate by other means due to the anti-export bias in economic policies, such as stocks, taxes and the exchange rate gap, among others,” warned Miguel Blanco, coordinator of the International Monetary Fund. Business affinity, from lack of access to credit in foreign currency.

Added to this are two needs, the need not to view the International Monetary Fund as the factor that pushed the country, with its intransigence, towards economic collapse and That the government does not lose the only anchor it has to give the sense that there is some kind of economic plan preventing a complete lack of control.”

For Blanco, “we will continue to see this process of continued negotiations on targets with the IMF and isolated measures providing some relief in the short term.” He concluded, “This whole scenario makes the need for the new government emerging from the elections more evident.” It has a comprehensive plan of macroeconomic arrangement and structural reforms that lifts Argentina out of its free fall and promotes private investment and job creation, which is essential to reducing poverty.”