The Executive Board of the International Monetary Fund approved this Wednesday a new review of the program with Argentina, the first under the government of Javier Milei, and allocated $4.7 billion with strong support for the “ambitious” adjustment plan of the libertarian to lower inflation and stabilize it. the economy.
The council, made up of executive directors representing the organisation’s member countries, analyzed for several hours the seventh technical level review of the agreement reached on 10 January by the team of Minister Luis Caputo and Fund officials led by the head of the of the western hemisphere Rodrigo Valdés and his second Luis Cubeddu. This agreement had succeeded in relaunching the Extended Facilities program which had been derailed last year with Sergio Massa’s “Plan Platita”, whose objectives had not been achieved.
On Wednesday the council placed the final seal and made the disbursement, even if the entire sum did not reach the Central Bank because a large part was used to cancel deadlines with the body itself, approximately 2,780 million dollars between principal due this Wednesday and the corresponding interest.
In a statement at the end of the session, the Fund said: “An ambitious stabilization plan is being implemented to correct serious policy delays in the final quarters of 2023. The plan focuses on creating a strong fiscal anchor together with policies to reduce inflation in a sustainable way. , replenish reserves and address long-standing distortions and obstacles to growth.”
“The path to stabilization will be difficult and will require strong political implementation and agile policy formulation. “Clear communication and well-targeted social assistance will be essential to generate social and political support for the programme,” she added.
Milei’s new plan is much more severe and shocking than that of Alberto Fernández’s government and is more liked by the Fund’s board of directors, tired of Argentina’s non-compliance. With cuts at all levels, it foresees a strong fiscal adjustment and renews previous objectives to a more “ambitious” level. The government has pledged to achieve a primary fiscal surplus of 2% of GDP by the end of this year and to accumulate $10 billion in net reserves by the end of 2024.
In fact, this adjustment, as predicted by the Fund itself on Tuesday in an update to its global outlook report, will cause the country to fall into recession this year at -2.8%, even if inflation eventually falls to 150 % per annum. 2024.
The news comes from Chief of Staff Nicolás Posse in Washington, who on Tuesday met with the organization’s number two, Gita Gopinath, to tell her the news on the handling of the omnibus bill in Congress and the impact that the postponement could have on the objectives of the program of the tax laws requested by the opposition. Caputo insists the goals will still be met, despite the government’s missteps with the law.
Posse also had this mission before the Treasury authorities since the United States is the most important member of the council, being the largest economy on the planet.
Source: Clarin
