IMF summit: Argentina will be challenged by its economic crisis and presidential election, in a global climate conditioned by China

(From Washington) Argentina’s economic situation and its complicated electoral process They will be interrogated from today The spring sessions of the International Monetary Fund (IMF) and the World Bank (WB) will be marked by a complicated global situation, with China’s geopolitical offensive and Russia’s war against Ukraine.

Mauricio Macri’s loan deal under Donald Trump and Christine Lagarde became a leading case for the IMF board and a professional bane for its staff. The fund’s most powerful directors — the United States, Germany and Japan, for example — have grown weary of agreeing to changes in firm targets, and bureaucrats who approved the stand-by granted to Macri have been kicked out of the multilateral lending system.

Alberto Fernandez and Sergio Massa now have the political responsibility to avoid a new institutional crisis with the IMF. Here in Washington they continue to ask about the political situation in Argentina, the stability of the economic plan and the possible outcome of the upcoming presidential elections in October.

The president and his economy minister have the advantage of the institutional support of Joseph Biden, who has decided to support Argentina in a possible confrontation with the IMF. The political endorsement came during a separate meeting between Alberto Fernández and Biden and a joint meeting of the Cabinets of Argentina and the United States at the White House.

However, led by the Treasury Department Janet Yellen And of course Chairs Board of Directors of the Fund taken with distance The political will expressed by Biden in the ninety minutes he shared with Alberto Fernandez in the Oval Office and Cabinet Room.

Representatives of the United States (under Yellen’s direct command), Germany, Japan, and Brazil were unwilling to accept A closed book Biden’s decision. They understand their regional and global political causes, But you already know the corporate and personal consequences of issuing the $53,000 million loan that Trump guaranteed to support the Macri administration.

The US President also relied on Lula da Silva as a regional actor as much as possible Geopolitical cap to China’s offensive in Latin America. But da Silva has revealed an international agenda that conflicts with the interests of the White House: He will sign the Silk Road in Beijing with Xi Jinping, allowing two warships from Iran to dock at a port in Rio de Janeiro. On April 17, he will receive Russian Foreign Minister Sergey Lavrov.

In this context, Biden mitigated the diplomatic backlash by inviting Alberto Fernandez to the White House. During their meeting alone, the two presidents concluded a tacit and win-win deal: Argentina froze geopolitical plans agreed with China, while the United States pledged to support the country in a possible confrontation with the IMF’s most reluctant directors.

The win-win outcome of the summit in the Oval Office indicates that Xi may lose influence at Balcars 50. Alberto Fernandez will have political insurance against opposition from the Finance Committee. Guzmán is now under the control of Minister Massa, who is already tired of accepting changes to the goals made in the closed Expanded Facilities Program.

In the short term — they estimate in DC — Biden will have to keep his word. A severe drought has complicated the strength of the central bank’s reserves and limited the level of income forecasts for the first half of 2023. Re-calibration Reserves for this year are expected, but the number negotiated with the IMF is starting to get bigger given the economic crisis Argentina is enduring.

Likewise, the agreement with the Fund establishes an annual fiscal deficit of 1.9 percent, adjusted for the macroeconomic effects of the drought. Not only did withholdings fall, but the volume of business activity also suffered The result is a fall in tax collection.

Alberto Fernandez has no intention of cutting spending on education, science and technology, public works, health, social security and housing. offset the fall in income and comply with the 1.9 percent fiscal deficit negotiated with the IMF. “It’s an adjustment and I plan to do it.”Balcarce commented on 50.

That is: if the government does not cut planned spending, there is no way to reach a deficit of 1.9 in 2023. And under these circumstances, Balcarce has no choice but to alert the IMF to meet the 50 target. Restructuring of fiscal deficit closed by 2022.

Argentina’s position may reveal a role of weakness before the IMF board, But it has some strengths due to the complex international scene. The country is suffering from drought due to climate change, increased energy prices due to the war in Ukraine and the White House’s apparent support for curbing China’s advances in Latin America.

From this point of view, Argentina should not be left at the mercy of the technical position of the Treasury Secretariat and the directors of Japan, Brazil and Germany. The geopolitical equation is easy to explain: the main players in the international group Willingness to revise project goals as agreed with funding Instead of deepening the country’s economic crisis, it should open up a region capitalized on by Beijing through soft loans it offers without institutional restrictions.

While this geopolitical equation is favourable, the Spring Sessions of the Fund will leave Minister Masa and his technical team with endless questions regarding the electoral process. In Washington, it’s still unclear how the president didn’t speak to the vice president, blocking Alberto Fernandez’s chance for re-election.

These questions may open a diagonal from the IMF staff to the economic advisers of Horacio Rodríguez Lauretta and Patricia Bullrich, who also participate in the sessions of the multilateral organization moderated by Kristalina Georgieva, who are in DC. The Fund’s staff believe that Casa Rosada can be restored as one for change Informal contacts are not ruled out here to know where they will go from December 10 onwards.

Meanwhile, Massa will embark on an international tour that will begin in Santo Domingo and end in Washington. The Economy Minister will land in the Dominican Republic on Wednesday the 15th, where he will hold key meetings with US Under Secretary of State Wendy Sherman and Under Secretary for Western Hemisphere Affairs Ricardo Zuniga.

Sherman was appointed coordinator of the White House’s closed jobs agenda by Biden and Alberto Fernandez, and Zuniga is a State Department official who knows the region and has maintained a friendship with Massa since the turn of the 21st century. In Santo Domingo, The Economy Minister will emphasize the need for fresh funds from the IDB and the World Bank -where the US controls its directorates- to strengthen reserves and counter the economic crisis.

When he lands in DC, Massa will execute a roadmap that includes meetings with the OECD, the World Bank, the IDB, the Saudi Fund for Development, the U.S. Chamber of Commerce and the National Security Council. Panels organized by IMF and WB.

On Friday, April 14, at 5:30 p.m., Massa will hold his most important meeting with the Fund. Later in the day, the minister will meet IMF Deputy Managing Director Geeta Gopinath. Gopinath is the brain International Monetary Fund and has a relationship Oops With Massa.

The deputy managing director knows how the conditions are to meet the agreed targets on expanded facilities credit and he was very critical of the minister during the G20 in India – when he examined the early redemption of bonds as early as 2023. At the meeting, the minister and deputy director confronted Georgieva as a witness.

On Friday the 14th, Massa and Gopinath will meet again at IMF headquarters 1. It will not be an ethical convention.

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