Argentina Anticipates IMF Deal Amidst Economic Concerns

Economic analyst Leonardo Piazza suggests that Argentina and the International Monetary Fund (IMF) are nearing an agreement crucial for the country's economic and exchange rate stability. While markets anticipate the deal, concerns remain about the terms, particularly regarding the central bank's reserve accumulation. Piazza noted that the IMF is concerned that the current economic program isn't building reserves due to the fixed exchange rate system. Despite government efforts to reduce country risk and improve bond values, reserves have not increased, raising concerns. Piazza highlighted the government's apprehension about eliminating the "dólar blanco" (unofficial exchange rate), fearing potential exchange rate volatility. He also pointed out that although the Central Bank buys dollars, reserves do not increase due to debt payments. Piazza believes that an IMF agreement could lead to benefits such as lower interest rates and reduced inflation, potentially reaching a monthly rate of around 1.5% in the second half of the year. He also addressed the challenge of increasing public service tariffs, a key tool for achieving a fiscal surplus, but one that carries significant political costs. Piazza anticipates a complete lifting of exchange controls after the elections, potentially leading to an economy without such controls by 2026 if the government is strengthened.