This Monday, the Government agreed with the International Monetary Fund (IMF) a reduction of almost US$ 2 billion in the international reserve accumulation target for 2023 due to the effect of the drought on exports, while maintaining the fiscal deficit target of 1.9% of GDP unchanged for this year.

The decision is part of the agreement at a technical level reached by the Argentine authorities and the staff of the IMF on the fourth review under Argentina’s 30-month Extended Facility Agreement (EFF), which must be approved by the Executive Board of the multilateral organization in the coming weeks. The delay in finalizing the figures began to corner negotiators because Argentina must pay the IMF US$2.7 billion next week, according to the guidelines of the original pact.

Now the technical staff will send the text to the Board, which will have to give the final approval before Monday the 20th to enable a disbursement of US$5.2 billion. Argentina was supposed to add some US$ 3.7 billion during the first quarter of the year, but the drought and the boomerang that resulted from the soybean dollar plans had a negative impact. So far, instead of adding currencies, the central bank adds up to a net outflow of about US$3.5 billion and there are no possibilities of reversal. The soybean dollar absorbed in December what could accumulate in January and February, and consequently the worst warnings about the effects of the plan came true. In addition, the drought deepened the lack of exportable products, deepening the financial slump.

Although the IMF would have given the go-ahead with the issue of reserves, it will be important to determine other key variables such as the fiscal deficit target. The agreement marks 1.9% of GDP for 2023 with assistance to the Treasury of no more than 0.6% of GDP.