The Minister of Economy, Sergio Massa, held a meeting at the summit of finance ministers of the G20 with the managing director of the IMF, Kristalina Georgievawho celebrated the “good progress” regarding the development of the fourth review planned in the program with the country. Massa obtained the approval of the head of the IMF after doing his homework and moving forward with the adjustment with the endorsement of all the members of the Frente de Todos.
“Very good discussion with @SergioMassa on the sidelines of #G20India regarding the new challenges facing emerging markets and Argentina. Progress is being made in the fourth review of Argentina’s program and we hope to communicate its conclusion soon,” Georgieva posted in a message on her Twitter account after meeting Massa at the G20 finance ministers’ summit taking place in the southern Indian city of Bengaluru.
The Government seeks the approval of the fourth revision of the program to obtain a disbursement of US$ 5.8 billion from the multilateral organization in March. One objective of the Minister of Economy was to achieve a concrete consideration by the G20 and the IMF of the impact that the war in Ukraine has on the Argentine economy, as well as the situation that the country currently faces due to the drought.
Meanwhile, the Vice Minister of Economy, Gabriel Rubinstein; and the head of advisers of the Palacio de Hacienda, Leonardo Madcur; finalized this week in Washington the details to obtain the technical approval of the fourth revision.
When the technical negotiations are finished, the document will be submitted for analysis to the agency’s board of directors, in a meeting that would take place in the last weeks of next March.
The period under analysis is the fourth quarter of 2022, the year that the Government celebrated that ended with a primary deficit (not including debt services) equivalent to 2.4% of the Gross Domestic Product (GDP), with an overcompliance of one tenth, since the agreed target was 2.5%. The expenses that fell the most in terms of GDP were Contributory Retirements and Pensions, Energy Subsidies, Universal Assignment for social protection, among others, according to Iaraf.
For 2023 the primary deficit target is 1.9%In other words, the Government must step on the adjustment accelerator. This year’s Budget already contemplates cuts in Housing, Promotion and Social Assistance, and Retirement and pensions.
According to reports in the media, the government is negotiating with the IMF make quarterly and annual goals more flexible this year, particularly in terms of reserves due to the impact of the drought and the war in Ukraine. On the second day of the G20 Summit of Finance Ministers and Central Bank Governors, Sergio Massa proposed that multilateral organizations take into account the economic damage caused by the war, among other things.
The Ministry of Economy warns that the drought in the countryside will affect income. In January, agro-export companies settled sales abroad for US$ 928.3 million, which represented a 61% lower turnover than the same month of 2022, and 75% less than in December of last year, reported the Chamber of Industry. Aceitera de la República Argentina (CIARA) and the Cereal Exporters Center (CEC). Agrarian employers are also waiting for a new version of the soybean dollar, another prize that will further improve their income.
The agreement with the IMF implies that each quarterly review loads the economy with uncertainty. If the goals are not met, the Fund will be able to make each crisis an opportunity to impose new conditions. It is probable that because it is an election year, the Fund will make the goals more flexible, but there are still several years ahead of the agreement where strong debt maturities will come.
Honoring the debt did not mean an improvement for the popular majorities. The path of paying off the debt led the country to ruin with more poverty, unemployment, and low wages. We must reject the agreement with the IMF and mobilize for the sovereign ignorance of the debt.