2023-06-27 19:22:41
The terms are shortening rapidly and the possibility of the International Monetary Fund (IMF) providing fresh money to finance the transition until the change of government is less and less, unless the ongoing negotiation contemplates a change in the scheduled maturities .
The delay in completing the recalibration of the program accumulates a series of maturities that in the next 30 days add up to US$ 6,941 million. Only the IMF Argentina has to pay US$ 5,313 million between June 30 and July 28.
Consequently, any agreement that is qualified as “beneficial” for Argentina must contemplate a disbursement of more than US$ 7,000 million so that the dollars that arrive do not vanish in a few days and become a mere accounting entry.
Next Friday, Argentina promised to pay the agency US$ 2,692 million, an amount that it does not have in the Central Bank’s reserves. They are the product of extensions of two maturities that operated on Wednesday June 21 for US$ 971 million and on Thursday 22 for US$ 1,761.
In order to avoid the total collapse of the Argentine economy due to the declaration of a technical default, the IMF pulled out a new contraption of its legal engineering to justify the postponement “until the end of the month” under the argument of “a right that the member countries to group maturities”.
In the Ministry of Economy they repeat that this week the agreement will be closed (the same thing that they have been suggesting for two months), but the concrete thing is that the expiration of Friday, and probably those of July, should have special treatment.
According to the established schedule, one week following the payment of the US$ 2,692 million, Argentina must credit on Friday, July 7, a new transfer to the IMF for US$ 1,294 million, corresponding to a new installment of the agreement in progress. Seven days later it will face another commitment, this time for USD 647 million, to close the demanding month of July with a payment of USD 680 million on July 28.
To these maturities with the IMF must be added US$ 129 million that Mendoza must pay on July 28 for the expiration of a Letter, plus US$ 82 million that operate with multilateral organizations (IDB, World Bank and others) and US$ 193 million of bilateral obligations. In addition, U$S 1,022 million of bond maturities must be paid, and new U$S 120 million of interest on loans with credit agencies.
Consequently, the combo of the next 30 days Argentina leads Argentina to face payments for US$ 7,000 million.
Undoubtedly, the strongest commitments are with the IMF and a political solution can be worked out there that escapes what is signed in the Extended Facilities agreement.
If the formal procedure were to run, once Argentina agrees with the IMF staff on the guidelines for the new program, the team led by Deputy Director Gita Gopinath and the person in charge of the Argentine case, the Venezuelan Luis Cubeddu, must submit the text to the Board of Directors for approval. definitive.
All this bureaucratic process would require several weeks during which the political game of the countries that command the IMF can stretch the terms more than is reasonable, consuming the terms of each expiration date.
Therefore, if the agreement is closed, the alternative is to immediately announce some kind of reformulation of the maturities ad referendum for subsequent approval by the board.
With this scenario, it will be essential to read very carefully the fine print of what can be communicated in the next few hours because the mere announcement of a “million-dollar disbursement of support for Argentina” can have a high media and political impact, but without any concrete benefit for the daily economy in need of dollars to maintain the productive process.
The money would arrive only to avoid a default with the IMF and according to new terms and amounts nothing would remain in the coffers of the Central Bank, which would be a very bad sign for the financial markets.
In today’s conference, the monetary authority sold another US$ 123 million and the red of the month was extended to US$ 653 million.
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