Friday, May 24, 2024

ECONOMY | 07-07-2022 16:06

IMF ‘looking forward’ to working with Batakis at ‘difficult moment’

New economy minister speaks with multilateral lender’s chief Kristalina Georgieva, who says Batakis confirmed her “commitment” to IMF refinancing programme.

Officials from the International Monetary Fund are “looking forward” to working with Argentina’s new Economy Minister Silvina Batakis, who has already spoken with the multilateral lender’s managing director.

Reacting to the resignation of Martín Guzmán and the announcement that Batakis would be replacing him as the head of the economy portfolio, an IMF spokesperson said Monday that its officials were ready to help Argentina tackle the “profound” challenges that lie ahead.

"We look forward to working with Minister Silvina Batakis and her team to continue to support Argentina and its people in strengthening macroeconomic stability and addressing its profound challenges to lay the foundations for more sustainable and inclusive growth," an IMF spokesperson said in a statement to the press.

Batakis faces a host of challenges ahead. Inflation has surpassed 60 percent over the last 12 months, while the country’s fiscal deficit is surging. Argentina's financial markets this week fell on uncertainty generated by abrupt changes in the country's economic management, with the collapse of assets compounded by the weakness of the peso in parallel markets, raising question marks over the immediate and long-term future.

Batakis, who declared this week she believes in “fiscal balance,” said that she intends to “follow the economic programme” that President Alberto Fernández has laid out, though speculation has grown that the new minister’s appointment and the global economic climate could mean Argentina will not comply with the targets laid out in the US$44.5-billion refinancing programme agreed with the multilateral lender back in March.


‘Good call’

On Wednesday, Batakis spoke on the phone with IMF Managing Director Kristalina Georgieva, reportedly reassuring the Bulgarian economist that Argentina intends to stick to the fine print agreed by Guzmán earlier this year.

“Very good call with Minister [Silvina Batakis] today to discuss implementation of Argentina's programme,” wrote the IMF chief in a post on social media following the call. 

“Looking forward to continuing our constructive engagement to promote economic stability and inclusive growth in [Argentina] in a very challenging global environment,” she added.

Georgieva revealed in subsequent comments reported by several international news agencies that Batakis had told her Argentina “is committed to the objectives of the programme and to working with the Fund in a constructive way to achieve these objectives.”

She said Batakis had also spoken with the Fund’s Director of the International Monetary Fund's Western Hemisphere Department Ilan Goldfajn, reiterating that commitment.

Georgieva did admit though that Argentina is facing a "very complex, very difficult time," and promised the IMF’s help in tackling runaway inflation.

"The minister understands the purpose of fiscal discipline and also understands that if you want to help the poor it cannot be in conditions of galloping inflation," Georgieva said.

Asked if Batakis could push for changes to the deal, she said that Guzmán had also disagreed with the Fund at times  and stressed the importance of reaching consensus.

For her part, Batakis assured that "in a framework of trust, we had a fruitful conversation with Georgieva and we hope to continue having a positive dialogue."

However, in one of a series of television interviews she granted this week, the new minister also hinted that the targets outlined in the original deal could change, especially given the global economic turmoil sparked by Russia’s invasion of Ukraine.

In late June, the IMF approved the first quarterly review of its new programme with Argentina, allowing for the immediate disbursement of some US$4.01 billion to bump up Central Bank reserves, and called for tighter fiscal policies.

The IMF’s executive board concluded that the Argentine authorities met all of the March 2022 continuous performance criteria and targets, when the programme was given the green light, and that progress was made on the structural front.



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