The agreement for the signing of the Letter of Intent between Argentina and the IMF for a new program with the agency advances in the final stretch, while the official intention is to have it approved in the week that begins and before March 1 , the opening date of legislative sessions in Congress.
Signs from both sides of the counter allow us to foresee that the Letter of Intent between the Executive and the staff of the Fund will arrive in the times that allow its treatment in Congress during March, in order to be approved by the Fund’s board before the key expiration of the day 22, the date on which Argentina is obliged to disburse some 2,900 million dollars in concept of capital of the megaloan inherited from Mauricio Macri.
The director of the Western Hemisphere Department of the International Monetary Fund (IMF), Ilan Goldfajn, said Friday that the organization is in “intense negotiations” during an international meeting of businessmen from the region, investment banks, and economists.
“We are in a close understanding with the Argentine authorities to reach an agreement at the staff level, which is the complete agreement with all the details, all the reforms, everything we have in the program; that is where we are, we are in intense negotiations. “, he maintained in the talk he had with Susan Segal, the head of the Council of the Americas and coordinator of the event in question.
“It is a realistic and reliable program that is only for Argentina in the broadest sense, this is a credible program, in a pragmatic and feasible way”Ilan Goldfajn, Director of the IMF’s Western Hemisphere Department
And continued: “We have intense meetings, many virtual, and that takes almost 24 hours a day, seven days a week”the Brazilian economist and former head of the Central Bank of his country explained, to account for the intensity of the efforts to arrive with the times.
“It is a realistic and reliable program that is only for Argentina in the broadest sense, this is a credible program, in a pragmatic and feasible way,” he analyzed.
Another of the strong signals towards the closing of an agreement occurred during an informal meeting of the board of directors, which took place last Tuesday. There, the Argentine case was discussed again, and this time the result of the meeting and the exposure of the US chair were “very important” for the Argentine position, admitted sources close to the negotiations.
It transpired that The United States would have softened its position and informally approved the agreementbefore the alternative that “a default is the worst scenario”, and beyond the technical objections in some raised points.
How is the draft of the new agreement with the IMF?
Argentina is negotiating a new agreement with the Fund to reschedule the 45,000 million dollars of debt inherited from the management of Mauricio Macriwhich is in a stage of defining technical aspects, such as the disbursement schedule, a range of price levels, and financing needs that will accompany the rest of the agencies, among others.
The program being negotiated will have a duration of two and a half years and will allow the country to write a new Extended Facilities loan, for a total amount similar to the debt that Macri left with the Fund, which will facilitate the repayment of all the debt in up to 12 years.
According to what has been known so far, the agreement allows gradually lowering the fiscal deficit (reduce it to 2.5% in 2022, to reach 0.9% in 2024), without labor or tax reformswhile providing room to increase capital spending on infrastructure.
One of the variables to be adjusted, also gradually, are the utility subsidiesfor which the Government is committed to designing a tariff segmentation plan, by neighborhood, according to socioeconomic level, which would initially affect some 500,000 users, according to one of the dance proposals, although there are still no definitions.
Meanwhile, the Minister of Economy, Martín Guzmán, assured that the project on the agreement with the IMF will be sent to Congress by the Executive Power with “annexes that will contain all the documents” and “every one of its details”.
“The idea that there are going to be secret documents is nonsense. Once the agreement at the IMF staff level is finalized, a bill will be sent to the National Congress that in its annexes will contain all the documents that are the basis of that agreement, with each of its details,” Guzmán said in statements made to Télam.
In parallel, in recent days there has been an intense diplomatic effort by the Argentine Government with the United States, where it transpired that, on the one hand, the Argentine ambassador to the United States, Jorge Arguello, held meetings with Jake Sullivan, National Security Adviser to Joseph Biden, and on the other, Foreign Minister Santiago Cafiero, who arranged a meeting on Thursday with the United States ambassador to Argentina, Marc Stanley.
The results favorable to an agreement were transmitted on Friday by the chancellor Santiago Cafiero, who highlighted that “there was an accompaniment from the political wing of the Joe Biden administration” within the framework of the negotiations that the Argentine Government maintains with the Fund.
“We needed them to get involved and that’s how it was,” said Cafiero, one day after having held a meeting with the United States ambassador to Argentina, Marc Stanley, and three days after the key meeting of the IMF board.
Also, both Guzmán and the Argentine representative in the IMF, Sergio Chodos, continued in the G20 -virtually and in person- with the search to garner support for the Argentine position when the formal vote is held in the IMF, before the teams of finance ministers who participated in the first summit of the year in Indonesia.
