Amid the ruling party's fight, the Monetary Fund called for strong political support for the new agreement.

Amid fierce disputes within the ruling party, the International Monetary Fund (IMF) said today that extensive domestic political support is needed for the program to be signed with the government to be successful.

In the face of a consultation on the differences between President Alberto Fernández and Vice President Christina Kirchner on this issue during a regular press conference, IMF spokesperson Gerry Rice said that the agency does not usually refer to domestic policy issues, but “broad political support”, which is important for achieving the success of the program, especially to ensure that the country can “own” the obligations contained in the technology contract.

Rice said that as soon as the Senate approves the debt law, the board of directors will discuss this agreement. Argentina had to pay about $2.8 billion to multilateral agencies between Monday and Tuesday, but did not provide details on the date of the meeting, as reported by this media If the parties agree, the meeting can be held urgently. There was no explanation as to what would happen if this date was postponed after the next week's deadline.

The spokesperson first mentioned the humanitarian and economic impact of Russia's invasion of Ukraine, and warned that this would affect world growth and create higher inflation on a scale that still depends on the persistence of the war.

In this regard, Rice admitted that employees evaluate the performance of the new program by “taking into account” the impact of this war on “growth and external and financial accounts” in Argentina and other emerging countries.

Following was Rice's primary definition of an extension facility contract.

In response to several questions regarding the conflict between President Alberto Fernández and Vice President Christina Kirchner, he said: “We do not comment on domestic policy issues, but as we mentioned, Argentina's extensive political and civil support is key to the success of economic programs, and extensive domestic support at the political level.”

- “This program will seek growth recovery by implementing growth recovery and social protection measures.”

- “The program will begin with measures to reduce sustained high inflation with a multi-strategy that includes a reduction in monetary financing of the fiscal deficit and a new structure for the implementation of monetary policies that allow positive real interest rates to support demand for pesos, which will be a difficult problem, especially in the global point of view, and especially in the impact of rising commodity prices on global inflation.”

- “We are constantly discussing with the Argentine authorities to conclude this technology agreement with employees for the approval of the Board of Directors, which the Argentine National Assembly hopes to discuss after the completion of the economic and financial program. There is still no date for the meeting of the Board of Directors, but we must be vigilant.”

- “As for the impact of the war, Argentina, like other emerging countries, is already affected by the war, including rising prices for goods that affect inflation. Employees will consider growth and the potential impact on the country's external and fiscal accounts. However, there is still a lot of uncertainty depending on the duration of the conflict.”

- “In the new facility program, if the Board establishes a new program with a longer debt repayment period, the IMF staff will be pleased to work with the Argentine authorities to see if they can be part of this initiative, which, like other countries, must be approved by the Board of Directors.”

The axis of consensus.

In this regard, it is expected that tonight the Senate will pass a law granting permission to borrow with the IMF to refinance about $40 billion in debt to the $50 billion already paid since 2020 on loans contracted by the Government of Mauricio Macri.

The Memorandum of Understanding sent by the Ministry of Economy to Congress states in the document that “the program will be monitored through quarterly review, transfer measures, quantitative execution criteria, indicator objectives and structural benchmarks.”

The agreement will enable a 10-quarter review of various economic policy criteria, including primary deficits, monetary support from the central bank to the Treasury Department, and the accumulation of reserves, etc.Achieving these goals is critical to ensuring that governments receive institutional spending.

Technical understanding stipulates that the macroeconomic target system distinguishes between two aspects: performance criteria and indicator targets. For the first two quarterly evaluations, March and June, the provisional figures were presented as execution criteria, and the figures for September and December are the same goals.

According to the details published in the documents sent to Congress, by the end of March, the government would have achieved the following objectives:

- Fiscal target: Although it does not specify a limit for the first month of assessment, the figure that will serve as a “bottom” criterion for the primary deficit of the national administration will be $222.3 billion. In addition, it will only allow the value of 5359 billion pesos for “floating” liabilities, that is, arrears for the previous year. This last number is fixed throughout 2022. For reference, the only financial data released is fiscal data for January, which is almost $16.7 billion.

There will also be enforcement criteria that the agreement considers “continuous” and that has not changed throughout the fourth quarter. The government's external debt repayment arrears are not accumulated.In this regard, the tolerance of financial programs agreed on Thursday will be zero.

Then there will be an indicative target for two aspects: collection and social expenditure.In the first aspect, the government should have a real income of 2,41.7 billion pesos between the first three months of the year.There will also be spending on social welfare programs with a minimum quota of nearly $152 billion. The agreed definition includes universal child benefits, pregnancy allowances and annual school aid, feeding cards and progress plans.

- Monetary objectives: There are two criteria for execution and one quantitative goal. The first group lists the net international reserves of the Central Bank of the variable layer and the limit of monetary financing from the monetary authorities to the Treasury. By the end of March, reserves have increased by $1.2 billion net, and the profit generation of the deficit will have a limit of $2368 billion. The final goal that BCRA will have to achieve is to intervene in the futures market, where the balance will be a limit of $6 billion.

The first revision will take place in June, three months after the program was finally approved by Congress and the IMF Board. At that time, the primary deficit was close to $56.68 billion, the accumulated government revenue was 4.7 trillion pesos, social spending was at least $31.8 billion, and reserves increased by $41 billion net, and the revenue generation of the deficit could not exceed $43.8 billion.

By September, it aims to issue a major fiscal imbalance of $912 billion, fiscal revenue of 6.9 billion pesos, $494 billion in social spending, $4.4 billion accumulated in BCRA, and $61.3 billion in monetary issuance to finance the Treasury Department. Finally, in December, the primary deficit was approximately 17.8 billion pesos (2.5% of GDP), revenue of $8.9 billion, and $7.7 billion for support programs, cumulative foreign exchange buffer of $5.8 billion, and financial aid to the Treasury Department It's going to be a billion dollars.

In addition, the government has pledged the IMF to consult with the technical staff of the institution before implementing measures that could hinder compliance with the contract and modify the guidelines of the program in any way.

“We are confident that our policies are appropriate to achieve the goals of the program, and we are ready to take any additional steps necessary to do so. We will consult with the IMF regarding the adoption of these measures and before revising the measures contained in this memorandum, and we will avoid policies that are inconsistent with the goals of the program and our commitments in the context of this memorandum.” The Ministry of Economy said.

He also said that the surplus of the scheduled revenue will be used to achieve financial goals. “We are committed to seizing this opportunity to reflect our commitment to macroeconomic stabilization policies by appropriately reducing the fiscal deficit or ensuring that the underlying scenarios of fiscal objectives are met in the event of adverse external shocks. Memorandum.

There will be a continuous flow of information between government officials and the IMF. In this regard, the agreement expects some data to be sent to Washington on a daily basis. These figures include dollar quotes, total amounts issued by BCRA, financial institution deposits from BCRA, liquidity support for banks, 7-day deposit rates, foreign currency positions of banks, and BCRA's activities in the future dollar market.

Others have weekly frequencies, such as sales and purchases of securities settled in different currencies registered and provided by the National Securities Commission, including the negotiations of the BCRA. The memorandum stated that “this information will be sent by the BCRA and will include daily estimates of the total balance and a report on the implicit exchange rate of the most representative securities negotiated in CCL and MEP forms and operations.”

In addition, there are bi-weekly data such as monthly, such as public sector income and expenses, service and debt balances, interest rates on municipal bonds every two years, such as spending by Casa Rosada on bank sector reserves, deposits and state pension schemes, and late payments to the ICSID Courts. In addition to local debt data, rulings belonging to the World Bank.

The countdown to the contract has begun, however, the game now begins, and every three months the government will be responsible for whether it is possible to advance the locker, request an exemption or be on the verge of default.

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