He International Monetary Fund (IMF) rated as “awesome” to the advances of the Argentine economic program and consider how a “very positive” fact that inflation is falling faster than anticipated. But he also warned of the need to act “pragmatically” in building social and political support for the reforms that the Government implements and the need to carry out “a consistent and well-communicated exchange and monetary policy to sustainably support the accumulation of reserves and disinflation.”
These concepts were pointed out by the organization’s spokesperson, Julie Kozackin his traditional press conference.
The representative of the Fund maintained that “Argentine authorities are decisively implementing an ambitious stabilization plan to restore macroeconomic stability.”
He recalled that this plan focuses on establishing a strong fiscal anchor that eliminates any financing from the Central Bank to the Government, along with policies aimed at reducing inflation, rebuilding reserves and resolving distortions and other long-term impediments to growth.
“The progress so far has been impressive,” Kozack stated and highlighted that a fiscal surplus was recorded in both January and February, for the first time in more than a decade.
He made a favorable evaluation by pointing out that “international reserves are being rebuilt. Inflation falls faster than anticipated. And market indicators, such as the gap in exchange rates and sovereign debt prices, continue to improve.”.
However, the spokesperson stated that “the path to stabilization is never easy, and requires the implementation of a firm policy.” In this sense, she pointed out that “It will be important to continue improving the quality of fiscal adjustment, while “Monetary policy will also have to adapt to this transition.”.
The Fund praised the authorities’ latest efforts to expand social assistance in the child assistance program, and to protect the real value of pensions.
Kozack stated that “it is important to continue working pragmatically to build social and political support to help ensure the durability and effectiveness of the reforms”.
After noting that the objective of the Fund continues “to support the efforts of the authorities to restore macroeconomic stability and lay the foundation for prosperous and inclusive growth in Argentina,” he considered that “at this time, it would be premature discuss modalities for a potential future program.”
In response to the query of Ambit Regarding whether the Fund considers that the exchange rate is in balance, the spokesperson maintained that “the (Argentine) authorities are using a comprehensive set of measures to lower inflation. As I already mentioned, this includes the establishment of a strong fiscal anchor, without financing from the Central Bank. And of course, This needs to be complemented with a consistent and well-communicated exchange rate and monetary policy to sustainably support reserve accumulation and disinflation.”.
Negotiations between Argentina and the IMF
It is worth remembering that both the Minister of Economy, Luis Caputo, as the Secretary of Finance, Pablo Quirnowill participate in the spring meeting organized by the multilateral organization starting April 15.
Although it is speculated that talks could continue regarding a new loan (there is talk of about 5,000 million dollars), if these talks take place it would be serious. in an informal context.
The government’s intention to Javier Milei is to obtain funds for about 15,000 million to strengthen the Central Bank’s reserves and thus be able to release the stocks. In this sense, a high official source confirmed to Ambit that conversations are being carried out both with the International Monetary Fund), “some friendly country” (with the intention of obtaining about 5,000 million dollars) and contributions from different investment funds (at a rate of about US$ 1,000 million each). .
The last visit by a senior official of the Fund was that of the director of the Western Hemisphere Department, Rodrigo Valdes, who highlighted the ambitious nature of the stabilization plan carried out by the economic team. He also indicated that inflation is coming down “faster than expected.”
In fact, in the corridors of the Palacio de Hacienda, they affirm that “It will be the first review in decades that Argentina will not ask the IMF for a waiver” In fact, both the monetary and fiscal goals will be met.
Valdez, in his last visit, asserted that the program “has a strong fiscal anchor that allows it to have a surplus and that completely eliminates monetary financing from the BCRA to the Treasury, thus achieving “increase reserves and lower inflation.”
Despite these achievements, the IMF in various statements also warns about the costs of adjustment and asks to protect the most vulnerable sectors.
In this sense, the application by decree of the new retirement formula can be interpreted as well as the 500% increase for the Thousand Days Plan that more than 600,000 children will receive.
Source: Ambito
