Agreement with the IMF: Doubts about anchoring, “lack of control” and demand for fundamental measures

No news for those looking for good numbers: The government is headed for breaching the targets of the agreement with the International Monetary Fund (IMF). Even before confirming the worst figures of the drought. Dry shoots on the table, the only anchor to control the inflation, are completely dim. In that context, Economic decision-makers are asking for basic measures to stabilize the economy and political consensus to implement them in the middle of the electoral process.

Economists confirm that the drought has had a real impact on the Central Bank of India’s (BCRA) reserves and tax revenues, which will help the fund review its expanded facilities program. however, They warned of the negative consequences of opening up space for a new “Platita” ahead of this year’s presidential election.

“We have known since last December that there will be a drought this year and that the harvest will not be good,” said Gabriel Camano Gomez, an economist from Ledesma. We know that the harvest was less than 40 million tons (of soybeans) from the second week of February. We know from early March that 25 million tonnes is the ceiling. What is happening now is nothing new. The economic plan should have been revised long ago”. The expert questioned.

“The problem here is that goals are never going to be achieved. Not going to fill the financial gap; Reserves due to mortgage this year to meet last year. In the first quarter, the financial target was not met and the drought has not yet impacted there, and it is very comfortable (quarter). They are not going to be fulfilled in the whole year 2023. Questioning drought as an excuse for the rest of the year, he said the scheme itself was “unachievable” by this government.

“Due to the drought effect, the March target has already been reduced. But finance and currency have not been touched. If the impact of the drought is due, there are arguments to lower the tax because you lost a point of income. You can go from a 1.9% deficit to 2.9% of GDP this year”, Economist Fernando Marul explained that he could request additional changes in social programs or rates.

“The point is that it’s not creating a ‘pre-step’ plan because of the drought. If they spend it there, it will have a negative impact. If the impact is due to drought alone, the impact will be reduced,” he concluded It warned that reserves for this year may not meet the target, which was cut by US$2 billion last month.

Due to the impact of the drought, the government and the International Monetary Fund will once again adjust the economic plan. “Everything is on the table,” sources in the Economic Council indicated after the meeting, with Economy Minister Sergio Massa and IMF Deputy Director Geeta Gopinath in Washington yesterday.

“Good meeting with Minister Sergio Massa. We spoke about the impact of the worst drought in Argentina’s history and pledged to continue working to strengthen the program in these difficult circumstances,” Gopinath said in a tweet this morning.

“The impact of drought and other climate events has affected not only agro-livestock production but also regional economies and their value chains,” he said. NationThe president of the Argentine Trade Union (UIA), Daniel Funes de Rioja.

“Thus, if we add to this pronounced exchange constraints and unresolved macroeconomic conditions, Clear substantive decisions are needed to align macro stabilization objectivesReversing the structural causes of inflation and simultaneously promoting efficient management of public expenditure, productive investment and proactive and confidence-building measures to generate real employment”, warned the head of the manufacturing company.

“We cannot ignore the crisis but consider it and confront it by seeking and achieving the consensus necessary to implement it. The time has come to do it,” said Funes de Rioja.

“In an exceptional situation such as drought, the lack of foreign currency means that it seems to me necessary to try to reach a new negotiation with the Fund to make our obligations more flexible. . From that perspective, it seems pretty reasonable. Mario Grinman, president of the Chamber of Commerce (CAC), said in a consultation with him Nation.

“Drought is an important factor in achieving the reserve accumulation target previously agreed with the International Monetary Fund, which cannot be compensated by other means due to the anti-export bias of economic policies such as stocks, taxes, exchange rate gap. Lack of access to credit in foreign currency”, said Miguel Blanco, coordinator of the Business Coordination Forum. warned.

“Added to this are two requirements, the International Monetary Fund should not be seen as a factor pushing the country towards economic collapse due to its instability. Not losing the sole anchor of government should give the impression that there is some kind of economic plan that prevents complete deregulation.

According to Blanco, “we are going to continue to see this process of continued negotiations of targets with the IMF and isolated measures that provide some short-term relief.” He closed: “This whole situation makes more and more clear the need for a new government emerging from the elections. There is a comprehensive plan for macroeconomic adjustment and structural reforms Freeing Argentina from its free fall and promoting the private investment and job creation essential to poverty reduction.