The IMF approved the second review of the agreement with Argentina

The International Monetary Fund (IMF) approved the second revision of the extended facilities agreement that it granted to Argentina to refinance the debt of 44,500 million dollars contracted by the management of Mauricio Macri.

The approval is the product of the policies applied in recent months and of the negotiations that the economic team led by Minister Sergio Massa carried out during his last tour of the United States, where he presented the numbers of the national economy in front of the leadership of that organization. multilateral, the US Treasury and other international entities.

The Fund praises the economic measures

“IMF staff and Argentine authorities have reached a staff-level agreement on the second review under Argentina’s 30-month SAF agreement. The deal is subject to approval by the IMF’s Executive Board, which is expected to meet in the coming weeks. Once the review is complete, Argentina would have access to around US$ 3.9 billion (SDR 3 billion),” the agency said.

Through a statement, the IMF highlighted “the recent and decisive policy measures aimed at correcting previous setbacks” and stressed that these “are helping to restore confidence and strengthen macroeconomic stability, including by rebuilding international reserves.”

Growth in reserves and control of inflation

The IMF statement highlighted that the latest review of the agreement evaluated the progress of the first review and updated it in the current macroeconomic framework. On this basis, it was analyzed “reaching agreements on a strong policy package to continue strengthening macroeconomic stability and ensure sustained and inclusive growth” of the country.

At this point he made a prediction about improvements in the international reserves of the Central Bank: “Net international reserves are projected to increase by $9.8 billion over the course of 2022/23”.

He also predicted a “gradual moderation” of inflation towards the remainder of 2022 and all of 2023. “Although inflationary pressures remain strong” due to the international context, “a gradual moderation is expected”, which results in a “reduction of uncertainties”.

This prognosis was given not without acknowledging a setback. Although “most” of the objectives to June of this year were met, there was a problem with international reserves net “due to a growth in the volume of imports higher than programmed and delays in official external support.” To this was added the exchange rate “volatility period” during the market coup last June and July that, however, “was stopped after decisive measures that corrected previous setbacks and rebuilt credibility.”

An agreement without changes until 2023

The IMF determined that the general objectives of the agreement with Argentina “will remain unchanged until 2023” and that the axes will continue to be the “fiscal order and the accumulation of reserves”.

In this sense, he stressed that “the context of decisive actions by the new economic team, market pressures are dissipating and the growth outlook remains unchanged at 4 percent for this yearbefore moderating to the potential rate of 2 percent from 2023.”

Also there were praises to the administration of Sergio Massa: “In the context of determined actions by the new economic team, market pressures are dissipating and the growth outlook remains unchanged at 4 percent for this year, before moderating to the potential rate of 2 percent from of 2023.

“In the front of the fiscal policythe program foresees meeting a primary deficit target of 2.5 percent of GDP in 2022 and 1.9 percent of GDP in 2023, as highlighted in the recently presented budget proposal” and stresses that these improvements They are the product of the following points:

  • “A better targeting of energy, water and transport subsidies”
  • “A new prioritization of spending to ensure the execution of critical investment projects and the adequate protection of poor households”
  • “Strengthened spending controls, which in turn should help contain spending arrears”
  • “Efforts to review corporate tax incentives and strengthen revenue compliance.”

“tighter macroeconomic policies”

It also highlights that the Central Bank “is committed to the continuous and more consistent implementation of the monetary politicswhich is already generating positive real interest rates”.

“This is necessary to strengthen the demand for assets in pesos, reduce external pressures and support a reduction in high and persistent inflationsupported also by a continued reduction in monetary financing of the fiscal deficit, which will be capped at 0.8 percent of GDP this year (below the 1 percent of GDP target) and capped at 0.6 percent of GDP in 2023”.

The report also maintains that “the most decisive implementation of tighter macroeconomic policies should support a strengthening of the current account balance, external competitiveness and reserve coverage”.

Steps are being taken to strengthen the peso debt marketthe transmission of monetary policy, the management of public finances and the frameworks to combat tax evasion and money laundering”, he added.

“Well-designed incentives to encourage investment and the potential for export of strategic sectorsespecially energy, remain crucial”, he concluded.

Source: Pagina12

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Varun Kumar

Varun Kumar is a freelance writer working on news website. He contributes to Our Blog and more. Wise also works in higher ed sustainability and previously in stream restoration. He loves running, trees and hanging out with her family.

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