At the close of a Thursday in which versions of the proximity of an agreement were promoted from the Economy, the International Monetary Fund (IMF) once used its diplomatic protocol language to point out that “We continue to work constructively with Argentina, to agree on the fifth review of the current program.” Apart from this formal communication, the conference did not allow for the final document to be reached, and as explained “Discussions continue to focus on policies to strengthen reserves and improve fiscal sustainability.”
“We will continue to communicate on the progress of these discussions”pointed out the IMF note, consequently moving the expectation towards this Friday.
In the final stretch of the negotiations, several measures are mentioned, among which is that the Minister of Economy Sergio Massa would launch a new, higher dollar for agriculture. In addition, it is pointed out that it will make imports more expensive with a tax, while maintaining the fiscal goal at around 2%, 0.1 points higher than that of the original agreement.
The official intention is to send signals to the market that it will seek to accumulate reserves -to avoid an exchange jump in elections- and maintain a certain “fiscal order” in public accounts, according to market speculation.
New agricultural dollar, taxes on services and luxury goods: the keys to Massa’s announcements
It is expected that there will be a new value for the so-called agricultural dollar for the regional economies, sunflower and sorghum. It is estimated that it would be US$ 2,000 million as of July 31. For soybeans, meanwhile, we would have to wait, perhaps, until August.
The agricultural dollar 4 would not only bring dollars for the depressed Central Bank reserves, but would add more taxes via withholdings, a variable that collapsed due to the impact of this year’s drought.
On Wednesday there was a conversation between Massa and Kristalina Georgieva, the managing director of the IMF. In a global report, the multilateral organization indicated that for the country in 2022 the ideal real exchange rate should have been between 15% and 20% higher, and urged them to move towards a “simplified exchange rate regime”.
In addition, he proposed the gradual and conditional elimination of the stocks. Precisely, in recent months, in the Palace of Finance they warned that they would not accept a devaluation of the official dollar due to the risk that it implies in the current inflationary process. On the other hand, versions emerged that Massa proposes a new tax for some imported goods, which would help him “take care” of the Fund’s dollars and also improve public accounts.
Economy intended that all transfers be brought forward between June and December, some US$ 10.6 billion in two tranches. At some point, there had even been speculation about an advance of US$1.8 billion more than 2024. On July 31 there are maturities for US$2.7 billion with the IMF.