Thursday, February 2

Minute-by-minute negotiation with the IMF: Argentina asks for a zero deficit in 2026 and a softer “landing” in the first years


The most important data is not only the divergence with respect to the year and period in which the IMF is asking to reach the zero deficit to the country. The most relevant is the size of the gradual adjustment requested by the Fund. The Cubeddu-Kozak tandem seems to differ quite a bit from Guzmán’s proposal.

For example, he asks Martín Guzmán for a more important cut for this current year, to reach a 2-point deficit: that is, he asks for an additional 0.5 percentage point cut, which would require greater sacrifices. By 2023, the IMF requests that the deficit be the equivalent of 1.4% of GDP. Starting in 2024, the IMF becomes more demanding. Instead of a progressive cut of 0.6 annual percentage points, it requires one of 0.7 and maintains this same requirement until 2025, the year in which it wants to reach a zero deficit.

As was said, while the Argentine government wants a cut of 0.5 percentage points between 2022 and 2023 that affects the availability of resources for the remainder of the mandate as little as possible, it offers, instead, a deficit of 1 percentage point of the product in 2024 (starting year post-election) and then adopts the same previous sequence of an annual cut of half a percentage point.

The conclusions are numerous. It is clear that Alberto Fernández wants to clear the remainder of his mandate from fiscal demands by the IMF. In any case, that would imply a gradual cut, although the government’s proposal results in a softer landing than the IMF’s abrupt one. On the other hand, the impulse of the electoral result would be “taken advantage of” so that, in 2024, the elected government can advance with the cuts in its first year.

As it was told, The payment that must be made this Friday for US$731 million has not yet been confirmed by the Government. As it turned out, It would only be willing to make this disbursement if, as a maximum, it manages to get the IMF to come as close as possible to Guzmán’s proposal or, in any case, if the Government manages to advance enough to open a new phase of the negotiation with some guarantees in the credit.

In other words, payment confirmation depends on a subtle perception: if the entire government considers that the negotiation instance has borne some fruit (although an agreement has not yet been reached), then the payment would be authorized with the commitment to continue the conversation. and respect what was agreed to that point. It is clear that not only the Casa Rosada and the Palacio de Hacienda must corroborate this assessment of real progress -many times subjective- based on the aversion to negotiating rupture.

It is known that President Alberto Fernández has been in favor in recent hours of shielding the negotiation and clearing the stage of any pessimistic statement, unlike the vice president who, from Honduras, charged hard against the multilateral credit organizations. Therein would lie Guzmán’s effort to buy some time, letting it be known since last night that there was an approach “in fiscal matters”, one of the points of conflict with the IMF.

At least two government sources participating in the talks with the IMF indicated yesterday that “progress” had been achieved, which referred to the possibility that Argentina maintains the chance to preserve its autonomy to define what kind of fiscal policy it should apply. at least in the next two years, that is, 2022 and 2023. It would then be an Extended Facilities agreement without the commitment of structural reforms in the short term and with supervision that does not generate the uncertainty of permanent “approval” by the government. IMF.

Argentina’s position so far was a zero deficit in 2027, while the IMF asked to do so in 2024.



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