New IMF agreement and Monetary Policy

ARGENTINA - In Brief 27 Sep 2018 by Esteban Fernández Medrano

Yesterday, after local market closed, Treasury Minister Nicolás Dujovne announced, together with IMF Managing Director Christine Lagarde, the new outline of the recently renegotiated Stand-by agreement. The agreement starts to have effect once the board of directors of the IMF approves it, which given the previous negotiations and expressions of support should be a mere formality. But the next scheduled meeting dates of Board are tomorrow, September 29th and October 1st.While the increase of the already sizeable Stand-by agreement was comparatively small as a percentage, “just“ USD 7.1bn (or less than 15%) totaling now USD 57.1bn, the main news was the acceleration of the disbursements (after approving the targets). For the rest of the year, expected disbursements increase from USD 6bn (including the September 15th disbursement date) to more than double the amount or USD 13.4bn. And for 2019 the expected disbursements doubled from USD 11.4bn to USD 22.8bn. All in all, Macri’s administration will receive from now to the end of 2019, USD 36bn or USD 19bn more than originally expected. Also the resources would no longer be treated as precautionary, but effectively to be used for financial support.With this funding, the government expects to almost close its financing needs until the end of the current presidential mandate. Only roughly speaking 40% of the short termed Letes would need still to be rolled over in the domestic markets. For more details find attached the official financing program presented by Dujovne (in Spanish).presentacionpf_20180926_18.00_1.pdfIn coordination with the announcements with the IMF, in Buenos Aires, central bank president Sandleris, announce...

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