The managing director of the International Monetary Fund, Kristalina Georgieva, said Thursday that the severe drought “complicated the work of the Argentine authorities” and that although they see a commitment from the government to continue “adjust policiesHe insisted on the importance of “implementation” of the program.
Georgieva referred to Argentina in a press conference within the framework of the spring assembly of the IMF and the World Bank, which takes place this week in Washington with the ministers of economy and the heads of central banks of all countries.
“We know that Argentina has been strongly affected by a severe drought which has undermined the performance of the economy and this has negatively and significantly affected the country’s population. This complicated the task of the authorities,” Georgieva said.
“We have studied the repercussions of this shock, we had taken them into account partially in changing the international reserves target, but we recognize that there is a commitment from the government to continue to adjust policies in light of the conditions they face. And indeed we will monitor very closely what they are doing, if they are successful“, He added.
“Of course, this is just about running the implementation and will continue to be in these difficult circumstances“, he indicated.
In late March, the agency’s board approved the program’s fourth review — which covered the final quarter of 2022 — and disbursed $5.4 billion. But staff reports He came with a number of caveats for the first quarter of this year, mostly due to the impact of the drought which has severely reduced reserve accumulation. In this context, the Fund agreed to reduce the funds target in the Center (US$3.6 billion at the end of March and US$1.8 billion in all of 2023).
However, it is estimated that this flexibility will not be enough to successfully complete the fifth revision. But the Fund has already warned: the fiscal deficit target, which is 1.9% of GDP at the end of the year, it will not relax.
In an election year, Minister Sergio Massa needs negotiate as much flexibility as possible and at the same time show Washington that it is activating the measures that the Fund is asking for: an acceleration of the abolition of subsidies for electricity to families with higher incomes; A cut in the new pension moratorium to cushion the impact on the deficit (they advise you to reduce half of the 800,000 people foreseen in the new system) and a rhousing on social benefits.
“Even greater efforts are needed to have a good macro environment. To be able to have a consistent fiscal policy, monetary policy and exchange rate policy that can help reduce inflation and avoid major disruptions in the domestic bond market,” IMF chief Gita Gopinath said on Wednesday in a interview with the Spanish newspaper. Village.
On Tuesday, the agency released the economic outlook for Argentina and said the country unlikely to grow this year, just 0.2%, a substantial drop from the 2% expected in January. He also forecast 88% inflation at the end of the year, far from private estimates, which reach 120%.
Washington (correspondent)
Source: Clarin
