The deputy director of the IMF spoke about the serious drought in Argentina and asked to focus spending

“If I look at the changes over time, I would say that in the second half of the year, thanks to prudent macroeconomic management, we started to see inflation come down,” the official recalled.

“But then – he acknowledged -, at the beginning of the year, the country is affected by a severe drought. This is a fundamental change, a great shock to the system. At the same time, there have been setbacks in policies,” he said.

In this sense, Gopinath pointed out that in the last review of the goals of the agreement with the IMF it was recognized that “due to the drought, there would have to be some compensation in terms of the reserve objective because this is a very important impact for the economy.” .

“Taking into account that the economic situation is very fragile in Argentina, the program must serve as an anchor to be able to reduce inflation, even if it is at a slow pace,” he said.

And I add: “To make sure that it’s going in the right direction, to make sure that the parallel market exchange rate is not too far off the official exchange rate. All of that requires confidence that there will be sufficient reserves and that fiscal policy will remain consistent with the reduction of inflation, which requires strong measures on the spending side to contain fiscal spending”.

For Gopinath, it is also “required that spending is well targeted. That energy subsidies, for example, are directed at the most vulnerable is essential. Much more specific social assistance is needed.”

“It is a very difficult situation in which the country finds itself. There is a shared understanding with the authorities that even greater efforts are required to be able to have a good macro environment. Being able to have a fiscal policy, a monetary policy and a consistent exchange rates that can help reduce inflation and avoid major disruptions in the domestic bond market,” he said.

And he concluded: “We will continue to work closely with the authorities and see what is needed in terms of stronger policies in order to move towards greater macro stability.”