In a document presented to the multilateral organization, the Ministry of Economy made a harsh report on the economic and social situation that the country is going through.
The letter was signed by the head of the Treasury PalaceLuis “Toto” Caputoand the president of the Central Bank, Santiago Bausilli.
The management of Javier Milei “received the worst economic, financial and social situation in our history, with an economy on the verge of a total crisis due to chronic and widespread macroeconomic imbalances,” the report said.
Along the same lines, they said: “Real wages fell and levels of informality and poverty increased. Today, more than 50% of Argentines live below the poverty line, and that number is close to 60% for children.”
The Government wants to apply an orthodox and ambitious stabilization plan to avoid the collapse of the economy
According to the document, The Government confirmed that it wants to implement “an orthodox and ambitious stabilization plan aimed at correcting extensive policy failures to avoid the collapse of the economy.”
The report explains: “Our program is based on a fiscal adjustment of approximately 5% this year, achieved through a balanced combination of spending cuts and, initially, temporary income measures to increase social assistance.”
With respect to fiscal deficit, Officials maintained that last year this indicator exceeded 5% of GDP and rose to 15% when taking into account quasi-fiscal costs.. “The monetization of the 2023 fiscal deficit by the Central Bank reached 5% of GDP, fueling inflation, creating a large oversupply of pesos and significantly weakening the central bank’s balance sheet,” they described.
“Upon taking office, we faced a dangerous 5% collapse in industrial activity and runaway inflation already at a daily rate of 1.5%, close to hyperinflation. We also had imminent payments to the IMF and international bondholders for more than US$2.5 billion,” they added.