Massa prepares new measures amidst conditions set by the IMF Executive Board during the fourth review approval

ARGENTINA - In Brief 03 Apr 2023 by Esteban Fernández Medrano
During the weekend the IMF Executive Board approved the fourth revision of the EFF, allowing an immediate disbursement of SDR 4bn (approximately USD 5.4bn). According to the IMF press release, “All quantitative performance criteria through end-December 2022 were met with some margin, supported by firmer macroeconomic policy implementation in the second half of 2022.” Additionally, a modification of the reserve target was approved “against a stronger policy package to safeguard stability, address setbacks, and secure program objectives”. More specifically, amidst the approval of the new SDR disbursement the IMF stated, “that mobilizing support from multilateral and bilateral partners, including finalizing technical understandings with remaining Paris Club creditors, is essential to ensure financing commitments are met and strengthen reserve coverage”. And given that downside risks have risen further, in the context of a very severe drought, “Agile policymaking remains indispensable to underpin program success, as additional macroeconomic policy tightening and further modifications to FX policies may be required to safeguard macroeconomic stability. Political support for program policies remains critical in the period ahead.” In plain English, while the IMF welcomes the fiscal tightening implemented in the second half of last year, initiated by Silvina Batakis and continued (with more political support) by Sergio Massa, more and not less tightening is needed in this electoral year, maintaining the political support of the government (particularly from the Kirchnerist branch). This is a particularly sensitive issue in an electoral year and after the social security morato...

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