Tuesday, March 26

The IMF approves the agreement with Argentina but recognizes difficulties in compliance


  • The agency recognized that the goals set with Argentina face “exceptionally high” risks due to the war in Ukraine

President Alberto Fernandez has said that the objectives of the program that Argentina agreed with the International Monetary Fund (IMF) to refinance 44,000 million dollars “are those of the Peronist Government.” But the IMF’s own board of directors has just implicitly recognized that what was agreed with this country could become, sooner rather than later, a dead letter. The agreed goals, it was pointed out in a document of the organization, face “exceptionally high” risks for compliance, mainly due to “the secundary effects” in the global economy of the war in Ukraine. The IMF formally approved the agreement with Argentina last Friday. However, and due to the difficulties that “are materializing”, it decided to advance “the first review of the program” that had been scheduled for June with the purpose of “recalibrate policies as needed” and, in this way, “ensure the fiscal objectives and contain the inflationary effects of the increase in the prices of raw materials.”

Argentina had promised to achieve the zero deficit of public accounts in 2024, significantly reduce inflation, which aims to break the 50% barrier this year, and cut state subsidies for energy prices, which in 2021 reached 2.3% of GDP. The Russian invasion and its consequences in the hydrocarbon market make it impossible to materialize those points of the agreement.

Related news

To avoid a suspension of payments, the Peronist government agreed with the IMF to refinance the loan that the president had received Mauricio Macri in 2018. That amount of money, unprecedented in the credit policy of the financial institution, was used in part to sustain the capital flight abroad, according to the current authorities. Under the new understanding, Argentina has a grace period of two and a half years to recover its economy, without committing to reforms of the pension system or labor laws, although in the midst of a bleak poverty picture: 40% of the population is in these conditions. The economy is growing (GDP is expected to rise by more than 4% this year) but wages are deteriorating.

Also Read  As the ocean industrial revolution gains pace the need for protection is urgent | Douglas J McCauley

mixed looks

Kristalina Georgieva, the director of the IMF, is confident that “sustained and growth-friendly fiscal consolidation will strengthen the debt sustainability”. The Peronism has been fractured in the facts by the agreement with the organism. the vice president Cristina Fernandez de Kirchner, his son, Máximo Kirchner, former head of the ruling party’s parliamentary bloc, have expressed their dissidence with the president. They reproach him, among other things, for continuing along the path of adjustment that, they argue, has been the cause of the November electoral debacle by which the Peronists lost their parliamentary majority and, in addition, the seed that heralds defeat in the 2023 presidential elections. In fact, Kirchnerism voted against the agreement that should have been approved by Congress last week. They have also contested the acceptance of the IMF reviewing the public accounts every three months and limiting the autonomy of the Argentine authorities.


www.elperiodico.com

Leave a Reply

Your email address will not be published. Required fields are marked *