Argentina is set to introduce fiscal and monetary measures that will devalue the peso as part of a hard-fought deal with the IMF to release delayed tranches of a $44 billion loan program. Buenos Aires will introduce a new preferential exchange rate for agricultural exports and levies on imports on Monday, according to Economy Ministry staff. Argentina and the IMF have been locked in negotiations for three months over the country's failure to comply with the terms of last year's debt restructuring deal after a record bailout in 2018. The fund says Argentina has fallen short on foreign exchange reserves and reduced the fiscal deficit, and last month delayed a $4 billion disbursement. Buenos Aires attributes its deficit to a severe drought that wiped out $20 billion in exports this year. Without the cash, Argentina risks defaulting on payments to the multilateral lender on a previous loan, with obligations worth about $3.4 billion due on August 1. That would further destabilize the country's already fragile economy ahead of October's presidential election.
The IMF and Argentina said in a joint statement on Sunday that they had "agreed on the core objectives and parameters" for a staff-level agreement to "consolidate the fiscal order and strengthen Job Function Email Database reserves," ahead of a review of the country's support program. Two Economy Ministry officials with knowledge of the talks said the deal would be finalized on Wednesday or Thursday. Economy Minister Sergio Massa said in a television interview Sunday night that the fund was preparing to release “a very large package of disbursements in August and an additional one in November.” He declined to give exact figures. Analysts have expressed skepticism that the IMF will disburse much more cash than Argentina needs to make its payments. The peso is down a third against the dollar this year in parallel currency markets, where it trades at about half the official exchange rate. Massa has been reluctant to drastically devalue the official peso rate.

Analysts said the minister, who is also a presidential candidate for the ruling Peronist coalition, fears the impact of a devaluation on inflation, which has already soared to more than 115 percent, but his objections have proven to be a major sticking point. in talks with the IMF. The new trade-related measures appear aimed at meeting the IMF's devaluation demands, said Salvador Vitelli, head of research at Buenos Aires-based consultancy Romano Group. Under the plan, producers of corn and other crops will be offered 340 pesos per dollar to liquidate their stocks, compared to the official rate of 268. Tax authorities will also impose a 25 percent levy on imports of services and a 7.5 percent tariff on imports of goods. Recommended But Vitelli warned that the policies could result in price increases. Farming and manufacturing lobbies have said the measures will distort markets and raise production costs. While the final agreement with the IMF is likely to include more measures, including reducing the fiscal deficit, the monetary and fiscal adjustments are a far cry from the radical macroeconomic changes that the IMF seeks in the long term.