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ECONOMY | 16-08-2023 13:59

Sergio Massa packs bags for Washington and IMF meeting

Just days after being defeated by Javier Milei at the ballot box, Sergio Massa schedules visit to Washington for talks with International Monetary Fund designed to shore up Argentina's economy.

Economy Minister Sergio Massa will travel to Washington DC next Tuesday to meet up with key officials from International Monetary Fund (IMF), government sources have confirmed.

The minister’s unscheduled trip was disclosed as news emerged that IMF technicians have contacted La Libertad Avanza presidential candidate and PASO primary winner Javier Milei.

The IMF also contacted Luciano Laspina, the leading economist in the team of Juntos por el Cambio (JxC) presidential candidate Patricia Bulrich, opposition sources confirmed.

Next Wednesday the board of directors of the multilateral credit organisation headed by Kristalina Georgieva will be meeting to approve a new disbursement of funds for Argentina.

The unexpected confirmation surprised the financial markets, which had only been anticipating a cash payment of US$7.5 billion in the belief that there was already a technical agreement to remit after the formal meeting of the IMF directors.

Contact with opposition politicians were confirmed by Milei himself, JxC sources and IMF spokespersons who said that the organisation "contacts in a regular and routine manner a wide range of referential political and economic figures, which also includes countries with IMF programmes."

An IMF spokesperson added that these contacts "are important for understanding the viewpoints and opinions of the Fund and its members regarding the general aims and the key policies of the programmes supported by the IMF."

"In the case of presidential candidates, these contacts also permit the staff to better  understand the key aspects of possible future economic policies," added the spokesperson of the multilateral lender.

News of Massa's trip, just days after the economy minister was defeated at the ballot box by Milei, comes after the Central Bank ordered a devaluation of the national currency while upping interest rates, thus adopting measures demanded by the organisation to halt the powerful surge of the dollar.

The 22 percent devaluation implemented by Massa simultaneously with the reopening of markets after last Sunday’s voting was considered a signal to the IMF, which had called for the exchange rate to be updated to avoid the dollars in the international reserves being used in a bid to contain a run on the currency. The news had hardly been broadcast when IMF spokesperson Julie Kozack ratified the arrival of the reimbursements for both June and September.

That statement sought to nip in the bud the continuation of the pressures from the financial and unofficial  “blue” dollars. Nevertheless, the exchange markets heated up again on Tuesday with informal rates peaking at 730 pesos. In that context, the news of Massa’s flight to the United States could be read as a sign of the strength of the Central Bank and the liquidity of the system.

These monetary and economic policy decisions were endorsed via IMF Communications Director Julie Kozack, who indicated: "We value the recent policy initiatives of the authorities and the commitment to safeguard stability, rebuild the reserves and strengthen fiscal order."

In the last week of July the Argentine authorities and the IMF technicians reached an agreement over the fifth and sixth reviews within the framework of the extended fund facility for Argentina, which implies the money being remitted to boost the reserves of the Central Bank.

A further disbursement of US$3.25 billion is expected for November, carrying the figure above US$10 billion although yet to be confirmed.

Massa will arrive in the United States in the midst of an electoral campaign which sees him as one of the three candidates with the most  votes in the PASO primaries. His presence in Washington will serve to show him as the guarantee of the stability of the process of repaying the foreign debt.

Next Wednesday the minister and Unión por la Patria presidential candidate will be bringing back to Argentina US$8 billion, which means US$500 million more than the US$7.5 billion announced in the original agreement, sources said.

The remaining sum to take the figure up to US$10.75 billion will arrive in November, thus being able to close out the year with IMF debt deadlines up to date plus some dollars for the next administration.



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