07/31/2023 – 09:17 Economy
Argentina will pay this week’s maturities to the IMF, three tranches for a total of almost USD 3.5 billion, through a CAF bridge loan, which was announced on Friday, and by expanding the use of swap of currencies it has with China and the CAF.
“Argentina is not going to use a single dollar of its reserves,” Minister Sergio Massa said today from the Palacio de Hacienda. “This is enormous peace of mind when it comes to looking at the functioning of the Argentine markets and the care of our reserves that makes our economy and our currency strong,” he said before the dollar began trading on Monday.
The agreement with the fund is probably the worst inheritance from the previous government, basically because it is a debt that is neither on roads, nor schools, nor hospitals, nor in any improvement, nor for companies, nor for Argentine families. It ended up being a program that only served to finance the outflow of capital from Argentina back in 2018-2019. But Argentina must live with that agreement and must resolve it until it can pay for it and once again become a sovereign country.
In this sense, on Friday a technical agreement was announced within the framework of the fifth and sixth revision, called the Staff Level Agreement, which allows us, between August 17 and 21, Argentina, through the approval of the board of directors or board of the International Monetary Fund, have the possibility of having access to 7,500 million dollars of disbursement during the month of August, as well as the possibility with a new review of a second disbursement in the month of November. But faced with this decision and this agreement, the uncertainty around the payments that Argentina had to make today appeared.
I want to bring you peace of mind, Argentina is not going to use a single dollar of its reserves to pay today’s maturity. On Friday, based on an agreement with the Latin American Development Bank, better known as CAF, with the approval of 20 of the 21 member countries and the decision of the entire Latin American community to assist and strengthen Argentine reserves, a outlay of a billion dollars. Today, the People’s Bank of China and the Chinese government decided to extend the use of the second swap or the second tranche of the swap that Argentina has with the Chinese government, allowing us the additional 1.7 billion dollars to complete the payment in the today of 2,700 million dollars, is made in yuan directly from the account of the second swap tranche of Argentina with China to the International Monetary Fund.
In this way, we protect our reserves in a year in which the worst drought in history was added to the problem represented by the inheritance of the debt with the fund, which cost us more than 20,000 million dollars of our exports for this year and more. of 5,000 million in income from the national public sector as a result of the taxes generated by these exports.
Within this framework, our challenge is to continue taking care of reserves, maintaining the level of activity and imports of intermediate goods and finished goods that are key to the operation and production of the Argentine economy, understanding that in addition, part of these imports is also at stake. the work of our families and the production and price of goods. On the one hand, I want to thank the Latin American Development Bank and the 20 countries that supported us in this decision to protect Argentine reserves to make the temporary payment to the fund until the time of disbursement. And also obviously thank the Chinese People’s Bank and the Government of China who made the decision to make the disbursement and above all the decision to enable the second tranche of the swap to guarantee that Argentina continues to carry out its imports and in parallel make the payment to the IMF.
Our responsibility is, beyond those who tried to prevent Argentina from approving operations or who raise sticks in the wheels all the time, it must be, is and must be, as an economic team, to guarantee the normal functioning of the economy within the restrictions imposed by the debt with the fund contracted by the previous government and imposed by the greatest drought in history that we Argentines recognize. But above all things, our responsibility is to solve problems.
We see many who return to old recipes when trying to solve Argentina’s problems and we feel that using geopolitics, with creativity, with the assistance of Argentina’s friendly countries, we can cross this bridge to finally get out of the crisis and face a path of development that also allows us to improve the income of Argentines and the accounts of the Argentine State. Thank you very much and I wanted to convey it to you, understanding that this is enormous peace of mind when looking at the functioning of the Argentine markets and the care of our reserves that contributes to the strength of our economy and our currency.