Wednesday, April 17, 2024

ARGENTINA | 29-02-2024 16:40

US Treasury boss Yellen, IMF chief Georgieva praise Argentina's Caputo, Milei

President Javier Milei’s government has taken “important steps” since taking office, declares US Treasury Secretary Janet Yellen during meeting in São Paulo

Influential US Treasury Secretary Janet Yellen has voiced strong support to the policies implemented by Javier Milei’s government, praising its approach yet warning that challenges lie ahead.

Economy Minister Luis Caputo last Thursday met Yellen on the fringes of the G20 summit of finance ministers in São Paulo.

Argentina is seeking support from its Western allies as it embarks on a massive campaign of austerity that involves slashing public spending, downsizing the government and the devaluation of its currency.

Reaction to the change in tack has been strong, with social and labour unrest on the rise. Teachers, railway workers, healthcare professionals and unions have already taken the streets for strikes as they struggle to cope with 250 percent inflation and falling purchasing-power.

Despite the challenges ahead, however, Yellen was full of praise for the Milei administration at the meeting on Thursday. She highlighted the the government’s "important steps" towards restoring economic stability and credibility.

President Milei’s government “has inherited an arduous task of stabilisation but has already taken some important steps towards restoring fiscal sustainability, adjusting the exchange rate combatting inflation," said Yellen at the start of her meeting with Caputo.

Caputo highlighted to Yellen that Milei had been "very honest" during last year’s presidenial campaign about the reforms necessary to overcome the economic crisis afflicting the country and that he is confident Argentina is at "a turning-point." 

The Treasury chief in turn congratulated Caputo "for his leadership during this period."

"There is no doubt that it has been and will continue to be a difficult period of economic transition for the Argentine people. Protecting the most vulnerable during this transition will be a challenge but of vital importance," stated Yellen in line with recent demands also made by International Monetary Fund Managing Director Kristalina Georgieva, who Caputo met the previous day.

She stated that she saw many areas for collaboration between the United States and Argentina on the topics being discussed during this week’s meeting of finance officials of the Group of the 20 main economies.

Yellen’s support for Argentina’s "economic transition" echoes backing also expressed by her Cabinet colleague, Secretary of State Antony Blinken, a recent visitor to Argentina, also on the back of a G20 ministerial Summit, this time in Rio de Janeiro.

On Wednesday evening Caputo also held a "very good" meeting with Georgieva, according to an official communiqué.

After the meeting, Georgieva highlighted in the X social network "the efforts sustained by the authorities to restore stability, support the most vulnerable and generate support for reform."

Caputo denied last Thursday rumours of a fresh IMF loan programme: "The Fund is open to exploring a new programme but we are not negotiating anything at the moment," he wrote in reply to a message in X.

"The seventh review of the programme concluded at the end of January" when the immediate remittance of US$4.7 billion was approved, explained an IMF official. That sum raised to US$40.6 billion the total extended as part of an assistance programme of US$44 billion.

"Our focus continues being to support policies aiming at restoring macro-economic stability in Argentina, at the same time protecting the most vulnerable," added the source.

A heavily indebted Argentina is suffering a lack of hard currency in a context of practically zero access to international credit markets.

Georgieva’s second-in-command Gita Gopinath last week also praised Milei’s economic programme on a visit to Argentina.

The government has implemented a 50 percent devaluation, removed price controls, deregulated the economy and made drastic cuts to reach a zero fiscal deficit in order to contain an annual inflation of 254.2 percent with over half the population below the poverty line.



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