Economy Minister Sergio Massa has lashed out at the International Monetary Fund (IMF), indicating in two interviews over the weekend that the country had made a series of difficult political decisions and was seeing little goodwill in return.
“Argentina complied with its program, but the Monetary Fund is not complying with Argentina by not reviewing how they are going to compensate the countries that paid the cost of the war [between Ukraine and Russia] with their economy,” he told Infobae on Sunday.
According to sources from the Economy Ministry, due to the hike in energy prices, transport and agricultural goods, Argentina unexpectedly lost some US$4.94 billion because of the war.
IMF and the Néstor Kirchner pipeline
Massa spoke about the complicated financial landscape Argentina is facing, due to the obligations with both private bondholders and the IMF. During an interview with El Cohete a la Luna, a site with a progressive and kirchnerist audience, he told journalist Horacio Verbitsky that Argentina’s combined obligations of around US$20 billion a year were “reachable”.
According to the Minister, energy exports will grow this year, and the pace will likely be ramped up next year once the first two sections of the Néstor Kirchner pipeline are finished. “The market with Brazil will be opened and Bolivia will be in decline,” he said. Massa added that in 2025, gas and oil exports will contribute a “US$14.4 billion impact on Argentina’s GDP”.
“I think Argentina has, together with Bolivia and Chile, a great opportunity to condition the global lithium market. And, furthermore, to condition the development of the value chain,” Massa told El Cohete a la Luna. He added that the government is working with Toyota, Nissan and Renault to “create value” in the country. “It’s very important for us to export the greatest added value possible and not only primary products.”
“One thing is exporting raw lithium and the other is to export a cell phone battery,” he told Infobae.
Massa also said that in December 2022 the government discontinued the tax refund system for companies that mine lithium. “We are in a moment where the incentive mechanism for lithium and minerals comes from the interest of the international market,” he said.
Massa discussed creating new ways for Argentines to save: one option under consideration, he said, is “investment instruments associated with goods that we Argentines produce: gas, maize, copper, with saving and investment instruments that can be a guarantee for those who distrust the financial system”. Massa said that those type of instruments could generate internal savings, which have a “very low rate” in the country. Massa said that they will also work in recovering Argentines’ people and companies’ access to credit, which he considered “maybe the most important part” of the income recovery process.
For Massa, a financial run against Argentinian bonds is not possible, at least during the first three months of the year. “We made, in the first week of January, the decision of clearing a great part of the maturities of the first quarter of the year,” said the Minister, referring to the debt swap that ended with 67% adherence two weeks ago. Massa said that they will keep clearing maturities during the year.
Massa denied that the peso debt is a “time bomb,” as Macri said. “The only bomb in the Argentine economy is the one that represented Macri’s agreement with the International Monetary Fund, which is a bomb we had to administer and that limited the country’s growth capabilities,” he added.