Faced with an economy that is not taking off and with no certainty about when a new agreement will be reached with the International Monetary Fund (IMF), Javier Miley and the economic team already have a new visit scheduled to the USAThe president will fly to New York this Saturday to attend the UN General Assemblytogether with Minister Luis Caputo. Although no meetings with the organization’s executives have been announced as part of the official agenda so far, the Government is keeping the channels of dialogue with Washington open, especially after the removal of an IMF official who has been highly questioned by the national leader.
The background of the arduous negotiations with the IMF was one of the key factors in defining the Budget 2025: This led the president to introduce a fiscal rule that prioritizes the payment of debt interestbefore discussing other state expenditures.
This aims to replace the traditional quarterly goals of the Extended Fund Facility (EFF) program with a policy of fiscal adjustment aimed primarily at meeting debt commitments“Pay the interest first,” seems to be the underlying message.
Authoritarians don’t like this.
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For investors in Argentine sovereign bonds, close monitoring by the IMF has historically been a sign of stability and security. The organization’s quarterly reviews have served as a guarantee for monitoring public accounts and the economic plan. Without this support, country risk could skyrocket, making debt refinancing promises unsustainable.
Now, one of the big problems that the Government faces in this context is the shortage of dollars to meet debt maturities starting in 2025. Faced with this challenge, the economic team is actively negotiating a loan abroad to cover the first payments.
At the same time, the government is seeking to refinance a significant portion of the more than $5 billion that will mature in the coming months, in order to avoid pressure on the foreign exchange market.
These efforts are added to the efforts of the Economy team, which is also evaluating the Issuance of new debt to alleviate the lack of liquidityDespite these actions, pressure on the financial dollar could increase if concrete agreements are not reached in advance.
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Javier Milei and Luis Caputo, in search of financial support
In an attempt to shield the first debt payments and advance negotiations with the IMFthe Argentine economic team, led by Santiago Bausili, head of the Central Bank, plans travel to the United States in the future. The mission includes seeking financial support from international entities and the possibility of renegotiating with the IMF.
The own Javier Mileyand probably Luis Caputo, would also participate in these negotiations within the framework of the trip to New York to attend the UN General Assembly. Although negotiations with the IMF are concentrated in Washington, Milei and Caputo could meet with senior officials during their visit. However, the agenda has not yet been confirmed.
According to close sources, Luis Cubeddu, deputy director of the Western Hemisphere department of the IMF, already evaluates the possibility of the next agreement with Argentina be structured under a new EFF, although the conditions will still need to be negotiated.
The Budget presented by Milei seems to have another objective beyond calming investors: send a signal of commitment to Washington. The Casa Rosada seeks to show that, despite the lack of a clear program with the IMF, there is a firm commitment to fiscal balance and debt repayment.
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2024-09-18 02:30:00