The Vice Minister of Economy, Gabriel Rubinstein, and the chief adviser, Leonardo Madcur, will travel to the United States tonight, with the purpose of closing the fourth quarterly review of the Extended Facilities Agreement with the International Monetary Fund (IMF), which will enable a new disbursement of US$ 5,400 million by the multilateral credit organization, official sources confirmed to Télam.
The period analyzed is the fourth quarter of 2022, the year that Argentina closed with a primary deficit (not including debt services) equivalent to 2.4% of the Gross Domestic Product (GDP), with a overcompliance of one tenth, if one takes into account that the agreed goal had been 2.5%.
For 2023, the primary deficit goal is 1.9%, in a year marked by several conditions that the Argentine government seeks to raise in the discussions in Washington, such as the impact of the drought on the agricultural harvest and consequently on the income of currencies, as well as the continuation of the conflict between Russia and Ukraine, with consequences for energy prices and transport and logistics costs.
Rubinstein and Madcur had participated in the deliberations at the beginning of February with the IMF technical teams, which were carried out in a hybrid format, since the head of the delegation, Luis Cubeddu, maintained remote contact.
Prior to that contact, the Minister of Economy, Sergio Massa, considered in mid-January that the IMF was breaking its commitment to review the costs of the war in Ukraine.
“Argentina complied with its program, but the Monetary Fund is not complying with Argentina in reviewing how they are going to compensate the countries that paid the cost of the war with their economy. It is a problem to be solved”Massa said on that occasion.
In this sense, the minister had warned when participating in the G20 Summit in Indonesia that “the war has been having a very high cost for the countries of the southern hemisphere” and that “it has already cost Argentina US$ 5,000 million and there is no global environment where this topic is being discussed”.
According to official working documents, fuel imports totaled US$5.8 billion in 2022, against the US$2 billion projected before the start of the war, resulting in a net increase of US$3.8 billion.
In addition to the cost, the increase in the price of the main basic products required more foreign exchange to import fuels, including those used for the supply of energy during 2022.
In the Ministry of Economy they emphasize that, after the conflict broke out on February 24 of last year, when Russia began the invasion of Ukraine, it was necessary, among other things, to rnegotiating the natural gas import contract with Bolivia, which had an increase of 114%, and the increase in electricity purchases from Brazil.
Another of the factors that had a negative impact was the increase, on average of 93%, in the prices of fertilizers, since Argentina imports close to 70% of the products that the field needs.
To mitigate this situation, the advancement of the acquisition of LNG for US$ 262 million stands out, which will allow foreign currency savings that are estimated to amount to US$ 2,100 million in all of 2023, and mainly the construction works of the Presidente Néstor gas pipeline Kirchner, who will reduce both imports and gas subsidies.
In the last revision of September 2022, the deputy managing director of the Fund, Gita Gopinath, maintained that in the Argentine case “the continuous decisive political actions are beginning to bear fruit.”.
“In a more challenging external and internal context, the determined implementation of policies, including the tightening of fiscal and monetary policies, is leading to a reduction in inflation, as well as improvements in the trade balance and reserve coverage,” Gopinath then stated.
