The goals of Argentina’s agreement with the International Monetary Fund (IMF) for the first quarter were met and even exceeded, according to a report from a study center of the Faculty of Economic Sciences of the University of Buenos Aires (UBA).
With a view to the first review that will be this month, and to analyze the progress of the agreement with the Fund, The RA Center of the Faculty of Economic Sciences of the UBA developed an index with the purpose of monitoring the level of compliance according to the established goals.
To develop this indicator, the economists took the numbers of the primary deficit, income in real terms, the monetary issue and reserves, which consist of the goals established with the IMF.
The analysis concludes that the compliance index as of the first quarter of 2022 is 76.59, this means that resulted in “an overachievement of the goals, on average, by 77%” more than the base scenario of commitments assumed.
What this indicator measures is “the distance from a base scenario of commitments assumed, where: 0 equals perfect compliance; values greater than 0 imply over-compliance; and values less than 0 mean that the base scenario was not achieved. and, therefore, there was a breach.”
primary deficit
Regarding the analysis by variable, the agreed goal of primary deficit in the agreement is 222,300 million pesos, and since the negative result was less, of 192,735 pesos, this means that “the goal was reached with a margin of ARS 29,565 million (it was 13% below the proposed maximum)”analysts explain.
However, the report indicates that the deficit goal is nominal, since they say that “although the deficit grew compared to a year ago in real terms, the dynamics of income and spending were not very misaligned (+9% and +12%). actual year over year, respectively)”.
Income
As to actual income“the goal was reached with a margin of 148,290 million pesos, a 6% above the agreed“.
“This improvement was explained by the dynamism of an activity that recovered the operational capacity lost during the pandemic, which is reflected in tax revenue,” they considered from the UBA.
Monetization of the deficit
Refering to deficit monetizationthe agreed goal is that the Central Bank could not transfer more than 236,800 million pesos to the Treasury, while the effective issue was 122,000 million pesos, they stated.
Namely, “the goal was reached, with a margin of ARS 114.8 billion (48% below the proposed maximum)”.
According to analysts, “this derives from the cessation of the monetization of the public sector deficit and a change in its financing model, increasing financing in the internal capital market.”
Bookings
As for the Bookingsthe agreed goal is an accumulation of 1,200 million dollars in the first quarter, when in this period 4,061 million dollars were accumulated.
“The goal was reached with a margin of 2,861 million dollars (238% above the commitments assumed)”, which was possible thanks to net disbursements by the IMF.
However, the report warns that the overcompliance indicator will decrease over time. “It is expected that the value of this parameter -which gave 77% in the first quarter- will decrease over time, subject to debt payments and future disbursements”, and to the progress of the program in the context of the war between Russia and Ukraine.
