High inflation, at least in double digits for about 12 years, has become the norm in Argentina, but this year it has taken off, reaching 143% year-on-year
The elected president of Argentina Javier Millay spoke for the first time yesterday, Friday, with the director general of the International Monetary Fund Kristalina Georgievawith which they discussed the economic situation in the Latin American state.
“Today I had an excellent conversation” with Ms. Georgieva via video link, “during which we talked about the major economic challenges facing our country,” far-liberal Javier Millay said via X (formerly Twitter). .
Mrs. Georgieva said that their discussion touched upon “the major challenges for the Argentine economy and the necessary decisive political actions”.
Latin America’s No. 3 economy is struggling to repay the $44 billion loan it received in 2018 from the IMF, especially as its foreign exchange reserves have collapsed.
High inflation, at least in double digits for about 12 years, has become the norm in Argentina, but this year it took off, reaching 143% year-on-year, in other words the highest level in the last 32 years, while the currency, the peso, remains on a continuous devaluation trajectory.
The outgoing government of Peronist President Alberto Fernandez renegotiated the loan that his right-wing predecessor Mauricio Macri had requested and received from the IMF, but the recession exacerbated by the new coronavirus pandemic and this year’s drought have hit Argentina’s economy hard, making it difficult achieving the goals set by the international financial organization.
“I spoke to her about various dimensions of our fiscal adjustment plan and our monetary policy. The Fund appeared to be very cooperative in order to find the structural solutions that Argentina needs”, according to Mr. Miley.
During his election campaign the far-right president-elect promised drastic fiscal adjustment, up to 15% of GDP, as part of a program that includes closing the central bank and dollarizing the economy.
“The IMF is committed to supporting efforts to sustainably reduce inflation, improve public finances, and promote private sector-led growth,” noted Ms. Georgieva.
Under the loan agreement, the IMF still has $3.3 billion to make available to Buenos Aires within the year.
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