IMF acknowledges ‘historic drought’ in Argentina renegotiations

According to an IMF spokesperson, conversations with the government have been “constructive”

International Monetary Fund (IMF) spokesperson Julie Kozack, said yesterday that the lender is taking Argentina’s “historic drought” into account in its ongoing renegotiations with the national government.

“The focus of the discussions that are underway now for the fifth review [of the program] has been on strengthening the authorities’ program while also taking into account the drought,” Kozack said today during a press briefing in Washington, DC.

In March 2022, Argentina signed an agreement renegotiating the US$ 44 billion debt former President Mauricio Macri acquired in 2018. The deal includes an economic program with certain targets that Argentina must comply with to receive disbursements or payments every three months, which are used to pay for the previous debt with the IMF.

However, after a drought that will slash between US$ 18.5 and US$ 20 billion in agricultural exports this year, Argentina is having a hard time complying with the reserve accumulation targets of the program. The government is seeking for the IMF to further moderate that target, while also looking for the lender to speed up the transfer of disbursements scheduled for this year to deal with the reserve scarcity crisis. Interventions by the Argentine Central Bank in the foreign exchange market to address that crisis allegedly accelerated the full renegotiation of the program two weeks ago, according to Economy Ministry sources at the time. 

Kozack says that the IMF is now having “constructive” discussions with the government. However, she did not specify any dates regarding these conversations and refused to answer whether the fiscal objectives of the program (which Argentina missed) will be changed. She also did not answer whether the IMF will bring the disbursements forward.

The fifth review of the program, evaluating Argentina’s performance until March, would mean a US$4 billion disbursement.

“We have been working closely with the authorities in the context of the challenging economic situation, which of course has been exacerbated by the historical drought that Argentina is facing,” she said.

This week, speaking at the annual summit of the United States Chamber of Commerce in Argentina (Amcham Argentina,) Massa said that “the drought changes the [IMF] program.”

“We are already discussing objectives and goals; everything is on the table in the discussion with the Fund,” Massa said. 

He also said the government is not willing to renounce the Central Bank’s ability to intervene in the foreign exchange market, something that was prohibited as per the fourth review of the program. 

Kozack did not answer when asked about Massa’s statements.


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