IMF and Argentina lay groundwork for Staff-Level Agreement

Government expects to sign the deal on Wednesday or Thursday

The International Monetary Fund (IMF) announced on Sunday midday that it has agreed on primary objectives for a new Staff-Level Agreement with Argentina. There is still no confirmed date for Economy Minister Sergio Massa to travel to Washington, D.C., to close the renegotiation of the country’s economic program.

“The main objectives and parameters that will serve as the grounds for a ‘Staff-Level Agreement’ have been agreed on,” the IMF announced via Twitter.

Government sources told the Herald they expect the staff level agreement — a preliminary technical understanding subject to the IMF board’s approval— to be closed between Wednesday and Thursday. 

The same sources said that Argentina and the financial institution agreed on the disbursement program for the second semester of 2023.  The country was set to receive three disbursements — in June, September and December — which would allow the country to pay the IMF debt. 

The deal aims to consolidate fiscal order and strengthen the reserves, recognizing the harsh impact the drought had on the country’s exports and fiscal income.

According to Argentine officials, the political support of the White House as well as US Congress was important to move the agreement forward. 

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In 2022, following the renegotiation of the record-high US$44 billion debt former President Mauricio Macri acquired in 2018, the country signed an economic program with the Fund that Argentina must comply with in order to receive disbursements every three months to pay back the previous debt. 

The IMF staff’s upcoming fifth review of the program will evaluate Argentina’s performance until March, which, if favorable, would lead to a US$4.1 billion disbursement. 

The official IMF press account on Twitter announced that Argentina’s Economy Ministry and Central Bank, along with the IMF’s staff, have finished going through the “core technical points” for the next program review.

Face-to-face negotiations between IMF members and the Argentine delegation started on Tuesday. Vice Economy Minister Gabriel Rubinstein, Central Bank Vice President Lisandro Cleri, and Central Bank Director Jorge Carrera traveled to Washington for the meetings. On Thursday morning, Chief Ministry Advisor Leonardo Madcur and Finance Secretary Raúl Rigo joined the group.

While Télam reported on Saturday that negotiations got more challenging in the final stretch, sources close to Economy Minister Sergio Massa told the news agency that there is no date in sight for when Massa might travel to Washington to seal the deal. 

Massa, who is also a presidential candidate for the ruling coalition Unión por la Patria (UxP), would have to postpone campaign commitments to travel to Washington.

Last week, an IMF report hinted that the real effective exchange rate in Argentina appreciated by 20% during 2022  and highlighted the importance of unifying its multiple exchange rates. 

Nonetheless, sources with knowledge of the negotiations told the Herald that the government is instead looking to implement a new preferential exchange rate for regional economies (including fishing, wine, grapes, pears, apples, rice, yerba mate, tea, tobacco, among other products) and another one for grain exports — although soybean exports would be excluded this time.

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