Caputo will negotiate a new agreement with the IMF. Lifting the stocks is an eternal dream. Economy column from El Círculo Rojo, a program from La Izquierda Diario on Radio Con Vos. In text and video.

  • Last week, the Minister of Economy, Luis Caputo, stated that the government will negotiate a new program with the IMF.
  • What is Caputo’s expectation? Get fresh dollars and with those green bills look for a way out of the exchange trap.
  • This Monday the “staff report” was released after the review carried out by the Argentine Economy Fund. What does this document say?
  • Despite congratulating the government for making a mega adjustment that allowed it to exceed fiscal, trade surplus, reserve accumulation and monetary emission goals, the IMF points out that there are still many pending tasks and structural reforms.
  • Immediately, the most important thing is that the Fund questions the pace of the “crawling peg.” What is the “crawling peg”? It is a kind of managed devaluation. The government established an increase in the official dollar rate of 2% per month.
  • Why is the Fund questioning this? Because, with inflation that the organization estimates will remain around 4% per month towards the end of the year, an exchange rate delay occurs.
  • The likely result is an erosion of the trade surplus the government achieved. If the trade surplus deteriorates, reserve accumulation may stop or even reverse.
  • But the Fund also indicates that the “blend” that exists for the agro-export sector must end at the end of June: this means that they settle 80% of exports at the official dollar exchange rate and the remaining 20% ​​at the “cash with settlement”, which is more expensive, but these dollars do not go to the Central Bank.
  • The Fund asks, in addition to a stronger increase in the dollar, to end the Country Tax, to move to a positive interest rate scheme different from the current one, to reinstate the Income Tax for employees, among others. issues.
  • What objective does the Fund pursue? That reserves continue to accumulate to pay, obviously to the Fund itself, but also to private creditors, fundamentally Wall Street speculative funds, to whom from the second half of the year and in 2025 very high debt maturities will have to be paid.
  • The government came out to reject the idea of ​​changing the “clawling peg” and ending the exporting “blend.” That is to say, even though the Fund celebrated the adjustment, there is tension with the government.
  • Even so, the path proposed by the IMF, although it does not say so, is to continue the path of economic collapse, always with the same objective of releasing dollars that are needed for economic functioning and for those dollars to be sacrificed at the stake. of payments of a fraudulent debt.
  • The organization knows that its program, which was overfulfilled by the Government, has a cost in a very deep economic fall, which at the beginning of the year it estimated at 2.8% and now estimates at 3.5%. He even admits that unemployment will increase and that “The current recession could be prolonged, fueling social tensions and complicating the implementation of the program.”
  • While there are differences between the government and the IMF on the “crawling peg” and the “blend”, there is agreement on lifting the “stock” and unifying the various exchange rates. But for this the government needs dollars.
  • The problem is that, according to many analysts and former officials of the Fund, it is difficult for the Gita to send much money. Who is Gita? We are talking about Gita Gopinaht, the number two at the IMF who recently became involved in the relationship with Argentina.
  • This is not a personal problem, but rather the countries that dominate the Fund’s Board of Directors would not be willing to send the US$15 billion that Caputo seeks.
  • Let us remember that Argentina still owes US$45 billion to the Fund. Yes, perhaps, the organization could disburse US$12 billion at most. The issue is with what times and with what conditionalities.
  • Experts say that the Fund would not be willing to make a large disbursement to support the exit from the “traps,” but rather a scheme of progressive disbursements tied to a program of structural reforms to be implemented over time.
  • Caputo’s difficulties in obtaining dollars are not minor. But this new chapter of the novel with the Fund reveals something very important: tied to a negotiation with the Fund, the Milei Government would have abandoned the idea of ​​dollarization, which is a monetary regime that is rejected by the organization.
  • Anyway, that’s not the most important thing. Since the IMF returned to Argentina under Mauricio Macri in 2018, poverty has doubled. The negotiation that Caputo will face takes us to the same story as always: that of sinking into the deep underbelly.

Economy / National Economy / Dollar / IMF / Luis Caputo / Javier Milei / The Red Circle


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