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ECONOMY | 16-11-2022 11:53

IMF chief tells Argentina to ‘stay on track’ and maintain fiscal discipline

International Monetary Fund Managing Director Kristalina Georgieva speaks to the press after meeting with President Alberto Fernández on the sidelines of the G20 Leaders Summit in Bali.

International Monetary Fund Managing Director Kristalina Georgieva on Wednesday called on Argentina to maintain fiscal "discipline" and continue on the path of recent months after a meeting with President Alberto Fernandez on the sidelines of the G20 Leaders Summit in Indonesia.

"We had a very good conversation about the impact of the war in Ukraine. It is very important that Argentina stays on track as it has done so successfully in recent months," said Georgieva, whose organisation approved a 30-month US$44.5-billion aid programme for the country back in March.

In early October, the IMF approved the second review of its agreement with Argentina, allowing for the immediate release of US$3.8 billion in funds, bringing total disbursements under the new scheme to US$17.5 billion.

Georgieva highlighted the impact of Argentina’s latest economy minister, Sergio Massa, in comments to the press.

"We have successfully completed the second review in a short period of time because of the discipline that Minister Massa and his team have shown," said the IMF chief after her meeting with Fernández, who was accompanied by Massa and Foreign Minister Santiago Caifero at the talks held at the Tampaksiring room of the Melia Hotel in Bali.

Argentina’s ambassador to the United States, Jorge Arguello, was present during the talks.

"We agreed in our discussion that in this very difficult global environment, it is important to continue with this discipline," Georgieva added.

She also stressed the importance of persevering with the goal of reducing inflation and improving the performance of the economy.

"It is very important that Argentina maintains the objective of lowering inflation,” added the IMF chief in remarks to the press.

In the talks, Fernández also highlighted the issue of IMF surcharges, once again calling for them to be slashed, and raising the possibility of revising targets for next year given the increased impact of the conflict in Ukraine. 

According to Argentina’s government, increased energy costs have meant an extra US$5 billion has disappeared from state coffers.

The G20 Leaders Summit, held over the past two days on the Indonesian island of Bali, has brought the food and energy security problems caused by Russia’s invasion of Ukraine to the forefront of the agenda.

In an address to world leaders this week, Foreign Minister Santiago Cafiero said that "in the Southern Hemisphere food is becoming more expensive or lacking, and what ends up killing [people] are not bullets or missiles, but poverty and hunger."

Inflation is not letting up in Argentina either: retail prices rose 6.3 percent in October and have risen 76.6 percent since January – one of the highest rates in the world, according to data released by the INDEC national statistics bureau on Tuesday. Over the last 12 months, prices have increased by 88 percent.

In Bali, Fernández also met with Chinese President Xi Jinping, from whom he obtained a commitment to extend an existing currency swap agreement by a further US$5 billion, the Argentine president announced.

Until now, the amount of the swap mechanism agreed with China amounted to 130 billion yuan, or some US$18.5 billion.

The "swap" is a currency exchange between two countries, which has no cost as long as the currencies are not used, but is recorded in the reserves, in this case of Argentina.



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