Luis Caputo -Minister of Economy- announced that after the meetings that took place this week with the IMF envoys, an agreement was reached technical level agreement principle. Luis Cubeddu (deputy director of the Western Hemisphere Department) and Ashvin Ahuja (Head of the Mission), had meetings with the Minister of Economy, Luis Caputoand the chief of staff, Nicolas Possein the days before.
The keys to the official announcement include new fiscal deficit and reserve accumulation goals, which the minister defined as “greater commitments to regain credibility.” One of the central objectives was to obtain a waiver (forgiveness) from the IMF Board for non-compliance with the objectives corresponding to the seventh quarterly review. The agreement closed by Martín Guzmán and approved in the national Congress, included quarterly reviews with tough fiscal and reserve accumulation goals that had to be met to receive the organization’s disbursements.
All the last governments were part of making the external debt grow and aggravating the country’s submission. In particular the The origin of the plan that is about to be renewed was the fraudulent loan taken by Mauricio Macri with the Monetary Fund, of which Caputo himself was a minister. Alberto Fernandez had a central role in validate the loandespite having denounced that its main destination had been capital flight, then Sergio Massa was the guarantor in Congress for the approval of the Extended Facilities plan first and then with its implementation as Minister of Economy, both with the support of Cristina Kirchner.
The technical agreement must be approved by the board of directors of the organization led by Kristalina Georgieva at the end of January for the IMF to carry out a disbursement of US$ 4.7 billion corresponding to the capital maturities of December 2023, February and April of this year. Interest payments will continue to be made with reserves of the Central Bank that are in critical condition, being located in negative territory. The return of the agreement once again subjects the country to quarterly reviews and meets the demands of the international organization.
From the Monetary Fund issued a statement more explicit than usual in relation to the serious consequences that will have the roadmap defined for the great majorities. In the document they state that: “While the path to stability will be challenging and Conditions will get worse before they get betterthe initial actions managed to avoid an intensification of the crisis.”, and then added: “In the initial stages, the elimination of inherited price controls and the correction of the exchange rate imbalance will have a inflationary impact and will deepen the contraction of activity which is already underway.” New promises of a better future that never comes, to try to get workers and their families to accept a present with increasingly acute problems.
From the Government, they detail in the statement, they committed to objectives that to be met would require new attacks on the vast majority. “These policies are expected to lead to a net reserve accumulation of $10 billion by end-2024including 2.7 billion dollars accumulated during the last weeks of 2023.”, they state from the ruling party, defining a goal that the State has not been able to achieve in a long time without going into debt. They also propose to “achieve a primary surplus of 2 percent of GDP this year (consistent with general equilibrium), through a combination of income and expenditure measures.”, in line with the deepening of the adjustment that they have been announcing.
The agreement comes in the midst of great uncertainty about the direction of the economic measures being debated in Congress. This week the exchange gap between the official dollar and the parallel ones began to grow, mainly because, given the increase in inflation and negative interest rates, the dollar once again gained strength as a currency to safeguard value.
In relation to the rumors prior to the agreement, Luis Caputo stated that the IMF is open to expanding the loan and grant new funds to the country, a decision that would aggravate dependence on the organization. The Minister of Economy argued that having chosen this option would have required more time and that It is a government decision solve the central problem of the country (according to them) which is eliminate the fiscal deficit without increasing the debt, but by reinforcing the adjustment of spending. Plan that is already underway, cutting pensions, freezing salaries and not increasing budgets for health, housing and education.
mercy has been proposing “a stronger adjustment than the IMF requests” to pay the debt and respond to the interests of great capital. Redoubling the commitment of the previous governments (that of Macri and that of Alberto Fernández, Cristina Kirchner and Sergio Massa) that never stopped placing themselves under the guidelines of the Fund. In just one month of management the consequences of his economic shock measures prices skyrocketed, taking them to alarming levels. This liberalization hits salaries, pensions and social benefits hard. This Thursday the Indec will release the inflation data for December, it is expected to be close to 30%.
The renewal of the agreement signed with the IMF implies the country’s dependence on the interests of the United States and other dominant countries, continuing to pay a fraudulent external debt from its origin and applying economic recipes that have always led Argentina to heartbreaking crises. The consequences are clear: increased poverty and unstoppable inflation.
The left is organizing to confront these plans. Making the general strike on the 24th of this month have an active and combative character may be a key step in setting up a counteroffensive against the attacks of the Government and the Monetary Fund.