Argentina: IMF hopes to close deal in coming days – 07/23/2023 – Market

The IMF (International Monetary Fund) expects to reach an agreement with Argentina in the coming days for the objectives of the next review of the terms of a loan of US$ 44 billion (R$ 210 billion, in current values) that the South American country has with the entity, the international organization informed this Sunday (23).

“The teams from the Ministry of Economy and the Central Bank of Argentina and IMF staff have completed the core aspects of the technical work of the forthcoming review,” the IMF said on Twitter.

“The central objectives and parameters that will serve as the basis for a ‘Staff Level Agreement’ have been agreed, we hope that it will be finalized in the coming days and then move on to the review of the program in Argentina”, he added.

The South American country must pay the IMF around US$ 3.4 billion (R$ 16.2 billion) between July 31 and August 1, at a time when the BCRA (Argentine Central Bank) net reserves are in the red at around US$ 6.5 billion (R$ 31 billion).

Argentina, which faces high inflation, a worrying fiscal deficit and low reserves in its central bank, has seen its foreign currency revenues affected by a historic drought that has affected its main export sector, agriculture.

“This agreement aims to consolidate the fiscal order and reinforce reserves, recognizing the strong impact of the drought, the losses in exports and in the country’s tax revenues”, added the international organization.

Argentina’s financial crisis, which has been marked by exchange rate volatility and rising inflation, should start to ease in November and December, with large inflows of foreign exchange from the wheat crop, Chief of Staff Agustín Rossi said on Friday.

Argentina’s prolonged financial crisis has been compounded by a ferocious drought that has reduced crucial agricultural exports by about $20 billion this year.

“This situation ends in November, December of this year,” said Rossi, who is also running for vice president in the October elections, from his office in the presidential palace of Casa Rosada in Buenos Aires.

Rossi said Argentina should not devalue its currency to calm inflation, which has climbed from 115% in the last 12 months, while its poverty level approaches 40%.

This provoked deep concern in the Peronist bloc, which hopes to triumph in October with Sérgio Massa as the presidential candidate and with Rossi as his running mate.

President Alberto Fernández’s coalition government has faced frequent clashes between its factions during its four years in office, but Rossi said that would not be repeated in a future Peronist government, with a new broad consensus among candidates.

Most polls show that Massa’s Peronists will face an uphill battle against opposition candidates.

But with other opposition favorites from the conservative and far right, Massa’s choice to run for the governor’s seat indicates that Argentina’s next president, to be chosen in October elections, is likely to be more market-friendly, a boost for hard-hit investors in the debt-ridden country.

“The local market can welcome that the electoral landscape now has moderate, pro-market, investor-savvy presidential candidates,” said Javier Timerman of Adcap Grupo Financiero, warning that many still have doubts.