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ECONOMY | 12-09-2022 20:59

Argentina’s new economy chief wins IMF praise on first trip

IMF Managing Director Kristalina Georgieva praises "strong steps" Economy Minister Sergio Massa has taken to stabilise the economy following meeting in Washington.

Argentina's Economy Minister Sergio Massa capped a week-long marathon trip to the United States aimed at securing the IMF’s coming review of Argentina’s US$44.5-billion programme with the Washington-based lender and earning the praise of IMF Managing Director Kristalina Georgieva in the process.

Georgieva congratulated Massa, who took over six weeks ago, for the “strong steps” he’s taken to stabilise the economy and “his clear intention to mobilise external support,” according to a statement.  

She added that staff from the International Monetary Fund intend to conclude a review of its programme with Argentina “in the coming days” and no targets would be changed.

Georgieva’s comments go beyond the usual rhetoric Argentine officials get in Washington, a reflection of how Massa, a seasoned political operator, has flexed the political muscle his predecessors lacked. Before Monday, Massa spent a week meeting with executives from Exxon Mobil Corp, Chevron Corp, Amazon.com Inc and Goldman Sachs Group Inc, among several others. 

Last week, the Inter-American Development Bank proposed boosting its financing for Argentina as its leadership also applauded Massa. 

Massa briefly met Monday with US Treasury Secretary Janet Yellen and her staff, a high-level meeting previous economy ministers from Argentina didn’t get so soon into the job. Yellen encouraged Massa to implement reforms necessary to rebuild the government’s credibility, stabilise markets and set the stage for sustainable growth, according to a Treasury official who asked not to be identified. 

“I’m satisfied with the results,” of the trip, Massa told reporters, “but I understand it’s just a step.” 

“Argentina’s situation is fragile because we have a big fight against inflation and we have sectors of the country suffering a lot, so we have a huge job ahead of us,” he added. 

Massa told reporters afterward he hopes all the technical documents for the IMF’s review of Argentina’s programme will be done by Friday, since the government presents its annual budget to Congress Thursday. 

Argentina is looking to secure approval by the IMF’s Executive Voard for the next disbursement in the programme soon since it would cover two payments totalling US$2.6 billion that the country owes the institution by September 22 stemming from a previous programme. Those payments to the IMF surpass all the cash net reserves Argentina’s Central Bank had as of last week, according to analyst estimates.

Despite the supportive meetings, Massa faces enormous challenges. Inflation is projected to end this year at or near 100 percent, the Central Bank’s reserves, while recovering, remain in critical territory and the economy is expected to enter a brief recession in the second half of the year. 

by Patrick Gillespie & Eric Martin, Bloomberg

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