Last week there was an emergency meeting of Argentine officials headed by the Minister of Economy, Luis Caputo, and the president of the Central Bank, Santiago Bausili, with the Deputy Director Manager of the International Monetary Fund (IMF), Gita Gopinath. The libertarian government has come from last year trying to reach a new indebtedness agreement to achieve “fresh funds” provided by the IMF.
On March 1, in the opening of the ordinary sessions, Milei said that in “the next few days” he will ask for support to the National Congress to support the new agreement with the Fund. This request is due to the fact that the fund usually demands political support for a new agreement. Caput He got a Gopinath Twit.
Excellent discussion with Minister @LuisCaputoAR and @BancoCentral_AR President Bausili. Making very good progress on negotiations towards a new Fund-supported program to further enhance stability and growth in Argentina. pic.twitter.com/eASW2XaI8a
– Gita Gopinath (@gitagopinath) February 28, 2025
In his speech in Congress, Milei said the need for the agreement to “clean up the debts of the Treasury” would cancel a part of the national treasure debt with the central bank documented in the so -called non -transferable letters, an accounting an accounting excuse to borrow the country. The truth is that the government is in a hurry to get the currencies that do not enter for investments and that they go quickly due to government intervention to artificially maintain the cheap dollar as an anti -inflationary anchor.
In this way, the BCRA reserves decreased by US $ 1,646 million. The markets seem to show nervousness, in addition to the casualties of Argentine ADRs in the United States of up to 33.9%, there were also falls from the Merval panel that reached up to 27.9%. The country risk went from 635 to 780 points.
Some of the great international banks that had been supporting Milei began to make differences and align with the devaluation of the IMF: the Bank of America estimated before investors that by the end of the year the official exchange rate will be above 1400 pesos, a figure greater than 1200 to which the government points. For its part, Citi Group said that the decline in crawling will generate an appreciation of the weight that “will drive imports and lower exports” concluding in “pressures towards a new devaluation of the exchange rate” that “could be intensified.”
The short legs of the Caputo Plan
The objective of the government is to sustain the financial bicycle exchange scheme and transient stability during the electoral period to contain inflation, increasing the mortgage over the working people and deepening the brutal adjustment.
Why don’t you finish closing an agreement? Because the background would like a lifting of the stocks, even if it is gradual, a rise in the dollar to correct the exchange delay and that the American currency floats, within a certain band, without intervention of the central bank. The Government knows that what the fund asks for impacts inflation, whose deceleration is the main asset of Javier Milei. Contrary to the IMF, the ruling party believes necessary to intervene over the dollar; In fact, Caputo, even with negative net reserves in the Central Bank, burned billions of dollars to sustain the price of the dollar parallel markets.
Rumors of all kinds circulate, it remains to be seen if the government and the IMF reach an agreement and with what conditions. But I can bring a new loan with the fund that would increase the external debt and dependence of the country with the agency whose economic policies have multiplied poverty in Argentina.
While a group of speculators takes the party with financial timba and indebtedness, the government adjusts retirees, education, health, public works, to pay the fraudulent external debt. From the left they mark the need to know sovereignly this debt, of which the working people did not see a weight. To avoid structural reforms it is key to break with the IMF and defeat the adjustment and looting plans of Milei and the Great Capital in the streets.
Source: www.laizquierdadiario.com
