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ECONOMY | 04-04-2024 19:27

IMF hails Argentina’s ‘impressive’ progress under Milei

Progress made by Milei administration is "impressive" but "the road to stabilisation is never easy," says IMF Communications Director Julie Kozack.

The International Monetary Fund has hailed the “impressive” progress made by President Javier Milei since taking office, despite Argentina’s ongoing economic woes.

The remark, delivered by an IMF spokesperson at a press briefing this week, underlines the strong support from the Washington-based lender for Milei administration. 

The progress made to date is "impressive" but "the road to stabilisation is never easy," said IMF Communications Director Julie Kozack.

The financial organisation has firmly backed Milei since he took office last December. The La Libertad Avanza leader has vowed to achieve zero deficit this year, though his plan comes at the cost of a sweeping "chainsaw" plan to cut government spending.

"Both in January and February a fiscal surplus has been registered for the first time in over a decade, international reserves are being rebuilt, inflation is falling faster than forecast and market indicators like the exchange rate gap and sovereign spread keep improving," said Kozack. 

Sovereign spread is a country’s cost of incurring foreign debt.

Authorities in Argentina are implementing "an ambitious plan of [macro-economic] stabilisation" centred on "a strong fiscal anchor" which eliminates any government financing on the part of the Central Bank and policies aimed at reducing inflation and rebuilding reserves but "the road to economic stabilisation is never easy and requires a firm implementation of policies," the spokesperson said from Washington.

She said the IMF believes it is important "to keep improving the quality of fiscal austerity" and to adapt monetary policy during the "transition."

Acknowledging Argentina’s runaway inflation exceeding 250 percent per annum and the fact that more than 41 percent of the population lives below the poverty line, the financial organisation said it applauded "the recent efforts of the authorities to broaden social assistance via the emblematic programme of child benefits with a correct focus and to protect the real value of pensions."

The reforms need "social and political support to guarantee their durability and efficiency," affirmed the spokesperson.

Public-sector employee unions took to the streets in protest this week against the dismissal of almost 15,000 state workers.

 

‘Premature’

Milei has refloated a credit programme of US$44 billion with the IMF, leading to  "active discussions," according to Kozack, who denied that a new plan was being negotiated.

"At this moment, it would be premature to discuss the modalities of a possible future programme," she declared.

“We continue our support for establishing the bases for growth but it is premature to discuss the modalities for a potential programme in the future,” pointed out Kozack during her Washington press conference.

IMF Western Hemisphere Department director Rodrigo Valdes had said much the same in the previous week during a visit to Buenos Aires.

These statements will condition the participation of Economy Minister Luis Caputo at the Annual General Meeting of the IMF and the World Bank.

The IMF has also requested more pragmatism from the Milei government when negotiating the changes in legislation needed to put through the economic programme, observing with interest the social impact of the measures taken and approving the newly decreed mechanism for updating pensions.

 

– TIMES/AFP

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