This is what Minister Ambito said just a few hours ago: “The program with the IMF has objectives and we must work to fulfill them, because this is part of the commitments that Argentina has made as a country.”
Oddly enough, every word in the document carries its own weight, is weighed and debated on both sides. “Even the commas and periods in the statement are agreed,” joked a delegation source. Minister Massa wants to leave this city with the written agreement, although it is understood that IMF staff will later have to present it to the board for approval. The struggle is also to determine what concepts the IMF will agree to include in this official announcement. It is well known that both President Alberto Fernández and Massa himself push the idea that Argentina is being damaged by the consequences of the war in Ukraine. Fewer reserves, more inflation. As a result of these shortcomings, Palacio de Hacienda put on the table for discussion not only some mitigating factors that the Fund should take into account, but also the request that the IMF support some initiatives, such as the exchange of information with the US. to find Argentines who avoid paying taxes by depositing their money in American accounts. The government estimates that in terms of the fiscal deficit, the war meant an additional equivalent of 0.7% of GDP. Massa is sure to talk about it today with David Lipton, an adviser to Treasury Secretary Janet Yellen, before the meeting with Georgieva.
To add another nuance, there are official sources who told Ámbito that all these talks are of a purely technical nature, ergo, not political. This, despite all the support capital received by the Minister in recent days, both in the White House, in particular the State Department, but also with multilateral organizations such as the Inter-American Development Bank (IDB) and the World Bank. , where he received the promise of immediate transfers from steps that unlocked previously established agreements.
Massa’s idea is not to put these patiently cultivated implicit endorsements of a political nature into play until necessary: he wants to consolidate a view of consensus with IMF staff, a path that allows him to look ahead. “We are carrying out technical work from all areas of the Ministry of Economy in conjunction with the technical areas of the IMF to close the second quarter review and build the future document, which is how the IMF sees it and how we both move forward. And I think in that sense the past week was good, as far as I understand, because of the information that was communicated to me in the team,” Massa told Ámbito.
Most important now
Despite all the sequence, there is one more detail that needs to be mentioned: the 2023 budget. The minister’s thoughts are not only here, but also seem to be related to the upcoming sending to Congress of the spending and revenue plan. It will be September 14th. In addition to the growth and inflation forecasts – which will remain far from what Martin Guzmán dreamed and planned for -, Massa reiterated that this year will be filled with a reduction of the deficit to a level of 2.5% of GDP and that he also the account will include the account assumed before the IMF for 2023, i.e. a deficit of 1.9%. If you think about it, Massa will return to Buenos Aires with the approval of the IMF and the political support of the White House, but only if he wins the parliamentary contest. If you think about it, what worries Washington is this: that of all the elements that Minister Massa has at hand to achieve the goals, the most immediate and possible is the exercise of fiscalism. To put it in Creole, if you can’t drastically change what happens to reserves in the short term, you can in terms of public spending and budget obligations.
Houston, we’ve got a problem
Massa’s idea is that outside the negotiations with the IMF, the goal is and should be in the future and at any time to accumulate reserves in BAKR, because according to those around him, the official believes that, among other things, it is also a guarantee of manageability.
As mentioned, with regard to IMF demands, for the government there are two factors that must be brought into the equation: on the one hand, that the agreement was signed some time before the economic consequences of the war between Russia and Ukraine, which could enable for new talks in the near future, but not by the government, but by the organization itself and even within the UN.
On the other hand, that implicit costs in terms of reserves, which are not integrated, can be calculated theoretically if we take into account the US$ 9 billion from the swap with China, the US$ 6 billion that Russia cannot transfer due to the SDR, some US$1.2 billion in payments from China that were not made because of the dams and even US$1.7 billion that was delayed by the IDB and which Masa himself managed to unblock now. To this can be added almost US$5 billion in energy costs.
The last few days have helped. Last Friday in Houston, in the framework of an important meeting with the main American oil companies, Massa received the announcement of new investments for the country for 1,030 million US dollars. There is US$330 million from Chevron to start Trapeal, a third production zone at Vaca Muerta, and US$700 million from Total to promote Plan Fenix, a development in the Australian basin 150 km from the Rio Grande.
Regarding his time in the White House, Massa said, “It was an agenda of meetings related to issues related to energy and food security that are part of the agreements of the Summit of the Americas and the G7 Agreement. in which Argentina participates’.
The meetings took place with key officials from Joe Biden’s administration: national security adviser Jake Sullivan; Juan Gonzalez, Senior Advisor for Latin America and Mike Pyle, Deputy International Economic Advisor at the National Security Council. “Obviously there have been discussions about what is the best scenario, understanding that the war generates an impact on the world economy that we cannot but put on every discussion table,” Massa told Ámbito. “International energy prices condemn Europe to a scenario of enormous economic and political instability, they put us to the test for 2023 in the challenge of having a very ambitious program but also very professionally designed to prevent Argentina from continuing to import the levels of LNG it had to buy’.
According to the minister, “the world has four main issues that are being discussed in the next two years: critical minerals, energy, the knowledge economy and proteins. Argentina, beyond the difficulties it has today, has a huge opportunity in the long term.”
The conference, held this week at Rice University’s Baker Institute, left a buzz. The main recommendations of the oil companies present were in favor of the regulatory and fiscal framework proposed by the minister.
“In the short term,” Massa said this morning, “we have the responsibility to establish a production volume for next winter that allows us to increase the number of molecules because we need the highest level of production in the local market with prices that are much higher.”more competitive”. “We need to plan for 2023 based on the expansion of Gas Plan 4, while at the same time implementing Gas Plan 5 to ensure the pipeline is filled and this requires investment that should start in November with a view to increasing of production capacity’. Along these lines, the Tigrens pointed out that “there is a pipeline that is underutilized in terms of capacity in the Australian Basin, so the incentive should be to try to add gas production in northern Argentina.”
“In the medium term, the key is to increase production to meet the process of energy self-sufficiency, but also to increase the volume of exports with continuous contracts, which will allow us to improve our energy trade balance, increase the number of jobs and increase on the volume of investment in the oil and gas sector as they are investment-intensive sectors,” Massa said.