The International Monetary Fund (IMF) is willing to be flexible with Argentina regarding the macroeconomic targets that the sides agreed during their debt-restructuring negotiations. The fund knows that responsibility for the original failed loan lies as much with it as with Argentina, so publicly admitting to a failed restructuring would hurt the credibility of both sides yet again.
That means that higher-than-expected inflation, divergence in growth targets, or an uptick in public spending could all be tolerated.
But it was paramount that the country showed progress on one metric: the accumulation of foreign currency reserves, which Argentina needs to pay back its loan.
So far, the country has been struggling to hit even that basic milestone. Central Bank bank data from last week showed the country was roughly USD 2 billion away from accumulating the USD 4.1 billion targeted in the agreement for the end of the second quarter.
With only one week to go before the end of the quarter, the sides took some drastic measures to ensure that the core target was met.
First, the IMF agreed to lower its quarterly reserve accumulation requirement from USD 4.1 to 3.45 billion, kicking that extra USD 650 million to the end of the year, as it argued that the war in Ukraine had created some short-term disruptions.
But Argentina still needed almost USD 1.5 billion more, and after a tense weekend of discussions the government implemented a temporary, de facto ban on almost all imports on Monday.
This was done by requiring importers to obtain new certifications...
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