Thursday, April 18, 2024

ARGENTINA | 21-02-2024 18:21

IMF number two visits Argentina for talks as social unrest grows

Deputy managing director of the International Monetary Fund, Gita Gopinath, begins two-day visit by meeting for four hours with key government officials.

The second-in-command of the International Monetary Fund, Gita Gopinath, began a two-day visit to Argentina on Wednesday, meeting with a host of government officials.

Gopinath, the IMF’s deputy managing director, spent some four hours with Economy Minister Luis Caputo, Central Bank Governor Santiago Bausili and Cabinet Chief Nicolás Posse. 

Talks focused on Argentina’s US$44.5-billion credit programme with the Fund and assessing the government’s compliance with it ahead of an upcoming quarterly review.

"I had a productive discussion with Caputo, Bausili and Posse on the efforts underway to restore macroeconomic stability, protect the vulnerable and strengthen Argentina's growth prospects," the Fund official posted on X.

The three officials outlined the results of January's management of the economy, government sources said. Argentina recorded a trade surplus of US$797 million and the government a fiscal surplus of US$588 million, the Télam state agency reported.

Gopinath, 52, is also due to meet with government officials, academics and representatives of social organisations and trade unions while in Buenos Aires.

Social tension and unrest is rising as protests grow in response to the first measures of President Javier Milei’s far-right government.

Before leaving on Thursday for the G20 meeting in Rio de Janeiro, the IMF’s number two will be received by Milei, who is advancing with drastic spending cuts and plans to deregulate the economy that the IMF have described as "bold" and "challenging.”

In 2018, during former president Mauricio Macri’s government, Argentina borrowed US$57 billion from the IMF, of which it eventually drew more than US$44 billion. The agreement was renegotiated in 2022 by Peronist leader Alberto Fernández, and after non-compliance with goals in 2023, has been re-floated by the Milei government.

Milei has moved to carry out a strong fiscal adjustment, higher than the level even recommended by the IMF itself. He has vowed to end 2024 with a fiscal surplus of three percent of GDP. 

In January, the almost entire reduction of expenditure on public works projects and lower payments to pensioners and state employees, contributions to provinces and subsidies to energy tariffs, it helped the government reach the first monthly surplus for the country in 12 years, while it increased the weakened international reserves from US$21 billion to 27 billion.

Last month, Milei’s reduction in spending on public works and payments to retirees and state employees, as well as contributions to provincial governments and the trimming of energy subsidies, allowed the government to record the country's first monthly surplus in 12 years, while increasing weakened international reserves from US$21 billion to US$27 billion.

When it approved the latest disbursement of funds for Argentina, the IMF praised Milei’s “ambitious stabilisation plan” that hopes to reverse an annual inflation of 254.2 percent. Poverty affects half the population and a 2.8-percent contraction of GDP for 2024 has been forecast by Fund’s technicians.

However, the IMF has warned the government that the president’s plan requires “clear communication” and protection for the most vulnerable.

Gopinath arrived in Argentina on a day that railway workers brought the nation’s trains to a half in a nationwide strike. The CGT umbrella union group, the nation’s largest labour confederation, is debating whether to stage a second national strike following the 12-hour one it called on January 24.

In the coming days, healthcare and education unions have also announced strikes to demand wage increases.



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