After some comings and goings, with negotiations that lasted longer than anticipated, the International Monetary Fund confirmed it has reached an agreement with Argentina and will release two disbursements of nearly US$10 billion, which will reach the national coffers after the PASO primaries.
The first tranche, some US$7.5 billion, will be released on August 21
The Economy Ministry has revealed that the second payment will be made in November, without specifying the date. Neither have they confirmed what will happen with the scheduled payments maturing on July 31 and August 1.
At any rate, there is confidence in the economic portfolio about the payments. Bloomberg News reports that “IMF managing director, Kristalina Georgieva took part in last-minute discussions with the Argentine government”.
The news arrives amid a federal campaigning tour embarked on by Sergio Massa, taking in the provinces of San Juan, La Rioja and Tucumán. He is seeking to strengthen his image and win the express backing of northern governors.
Details of the agreement
The Economy Ministry came to an understanding with theIMF to make progress in the revision of Argentina’s programme and obtain the disbursements scheduled for the second semester this year.
The highlights of the agreement, as anticipated from Massa’s portfolio, include:
– A disbursement of US$ 7.5 billion in August and another one in November.
– Approval of powers to intervene in markets to ensure their normal operation.
– There will be bridging transactions for the next payments to the body, along with other multilateral transactions for Argentina to move forward with the programme against the IMF disbursements.
– Reserve targets will be reassessed to adjust them to the impact of the drought; and support for the measures announced this week related to the foreign and fiscal sector.
– Foreign exchange simplification: equating the tourist exchange rate and the card dollar, maintaining the Qatar dollar for any monthly purchases above US$300. The Tourist Dollar and Card Dollar (monthly card purchases up to US$300) will be unified at 30 percent PAIS Tax + 45 percent collection of Income Tax. There are 900,000 people nationwide on average buying US$150 every month.
– PAIS Tax on Services: the general PAIS Tax will be 25 percent on all services, except for: (i) Freight, which will be applied a 7.5 percent rate; (ii) Healthcare and Education, which are exempt under Article 36 of Law 27,541, and; (iii) Concerts, already paying 30 percent. The tax is already collected by banks when importers access the Foreign Exchange Market (MLC, in its Spanish acronym). This is not applicable if paid with one’s own dollars.
– PAIS Tax on Goods: the general PAIS Tax will be 7.5 percent on all goods, except for: (i) Medication and fire-fighting material, exempt under Article 36 of Law 27,541, (ii) Luxury Goods, already levied 30 percent, (iii) Fuels, lubricants, goods related to energy generation, as well as supplies and intermediate goods linked with the basic food basket, which will still not pay the PAIS Tax. The tax is already collected by banks when importers access the Foreign Exchange Market (MLC). This is not applicable if paid with one’s own dollars. The collection applies to all imports, including those going into the Duty-Free Zone and Special Customs Area of Tierra del Fuego.
– Regional Economy Dollar: the regional economy scheme will be expanded. Exports settled up to August 31, 2023 will have a dollar rate of 340 pesos per greenback. Foreign currency projections: US$2 billion, including corn