Tuesday, May 7th 2013 - 09:28 UTC

IMF again warns Argentina about protectionist and foreign currency exchange policies

The International Monetary Fund Director for the Western Hemisphere, Alejandro Werner, warned on Monday about the “negative effect” that the existence of two foreign currency exchange markets and protectionist policies bring to Argentina.

Werner revealed that the IMF is “in dialogue with Argentine officials as well monitoring their work”

“Based on our studies, the IMF believes that commercial restrictions plus having a dual exchange market generate inefficiency in any economy. This will definitely affect negatively Argentina’s economy’s performance”, said Werner during the release of the Regional Economic Outlook for the Western Hemisphere.

Likewise, Werner revealed that the Fund is “in dialogue with Argentine officials as well monitoring their work” in order to elaborate a new inflation and reliable inflation index.

”We hope they can solve their problems with the old index”.

According to the government’s official INDEC statistics agency, Argentina’s inflation last year was 10.8 %, while most private consulting agencies agreed it averaged 25.6%.

Growth in Latin America and the Caribbean is set to pick up from 3% in 2012 to 3.5% in 2013, supported by stronger external demand, favourable financing conditions, and the effects of earlier policy easing in some countries, the IMF said.

Likewise, the IMF said that external risks to the near-term outlook have receded. Policy actions in the Euro area and the United States have removed immediate threats to global growth and financial stability, the report said.

According to the report, medium-term risks for Latin America remain tilted to the downside. The key risk is a reversal of the favourable tailwinds of easy financing conditions and strong commodity prices that have prevailed since 2010.

The region would be particularly affected if a sharp slowdown in China or other key economies triggers a drop in commodity prices. Another risk is that lack of progress in addressing the medium-term fiscal challenges in key advanced economies leads to a sharp increase in sovereign and corporate risk premiums, with negative impact on global growth.

Domestically, the risk of a deterioration of external and financial sector balance sheets has increased in some countries, the report said.

For Argentina, the report indicates one of the lowest projected growths, only above Venezuela. According to the IMF, and based on the data provided by the Argentine government, Argentine will grow 2.8% this year, and 3.5% for 2014. Meanwhile, Argentina external current account balance has been projected at -0.1%of GDP for 2013 and -0.5% for 2014.

Likewise, Argentina’s inflation has been projected at 10.1% for both 2013 and 2014, the second highest in the region after Venezuela’s projected inflation of 28% and 27.3%.

However, since the stats for the report were from INDEC, the IMF reiterated it has issued a declaration of censure and called on Argentina to adopt remedial measures to address the quality of the official GDP and CPI-GBA data as alternative data sources have shown significantly lower real growth than the official data since 2008, and higher inflation rates than the official data since 2007.

In this context, the IMF is also using alternative estimates of GDP growth for the surveillance of macroeconomic developments in Argentina.

In another passage, the report remarks that Venezuela and, to a lesser extent, Argentina would need to strengthen their current fiscal position considerably; otherwise they may have to undertake sizable (pro-cyclical) fiscal consolidation in the face of adverse shocks, including moderate ones. This reflects both their sensitivity to external conditions and a relatively weaker initial fiscal position.

Current account balances have weakened in recent years, and asset prices are on the rise. Credit growth has moderated, but remains high in a number of countries.

The report reaffirmed its earlier message that countries in the region should take advantage of the current favourable economic conditions to build a strong foundation for sustained growth in the future. Policy priorities include building stronger fiscal buffers, improving policy frameworks, and pressing ahead with structural reforms to increase productivity and potential growth.

Growth in the financially-integrated economies in 2013 is projected at about 4¼ percent. For these countries, the IMF pointed out that the key policy priorities are to strengthen public finances and protect financial sector stability. Stronger public balance sheets would help ease pressure on capacity constraints and arrest the widening of current account deficits.

Growth in the other commodity exporters is expected to increase to 4.6% in 2013, from 3.3% in 2012. However, in the large energy exporters (Bolivia, Ecuador, and Venezuela), growth is projected to moderate. The IMF said these countries would benefit from saving a much larger share of their commodity revenues.

Average growth in Central America is expected to remain close to potential in 2013. Looking ahead, the report said that gradual tightening of fiscal policy in these countries would be necessary to reduce fiscal and external imbalances and ensure debt sustainability.

In much of the Caribbean, high debt and weak competitiveness will continue to constrain growth. These economies are projected to grow by about 1¼ percent in 2013 (from ½ percent in 2012), as external demand strengthens gradually. The key challenge for these countries remain broadly unchanged—reducing high public debt, containing external imbalances, and reducing financial sector vulnerabilities.

The May 2013 Regional Economic Outlook features three analytical chapters dealing with the challenges of sustaining growth and strengthening balance sheets. Specifically, the chapters assess the region’s growth potential, the impact of changes in external conditions on public and external debt dynamics, and the use of the windfall from the recent terms-of-trade boom.

38 comments Feed

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1 Anglotino (#) May 07th, 2013 - 10:26 am Report abuse
Warning Warning Warning.... but do they listen?
2 LEPRecon (#) May 07th, 2013 - 10:34 am Report abuse
@1 Anglotino

Agreed. They've already warned. It's about time they put their money where their mouth is and start sanctioning, or kick them out all together.

I know Argentina going tits up isn't going to help the world's economy, but it's going to happen sooner or later unless the Argentine Government are FORCED to obey the treaties and international laws that they promised they would.

One way or another Argentina is going down, mainly because the Argentine government are useless and don't even attempt to solve the problems, they just compound them.

Maybe a year ago, with action from the government things could've been turned around, but as usual, rather than admit that they may have got it wrong regarding the economy, the government just keep on track, racing at full speed towards disaster, whilst simultaneously yelling that 'everything's okay' and 'it's all (insert scapegoat here) fault.
3 Brit Bob (#) May 07th, 2013 - 10:45 am Report abuse
More proof that Cristina need 4 more years to finish the job and destroy Argentina.
4 Anglotino (#) May 07th, 2013 - 11:44 am Report abuse
@2 LEPRecon

Totally agree. Such a shame for the average person. Also hope it doesn't spill over too much into the region.

Btw, what does your name stand for? I always think if a Puerto Rican economist living on the Lower Eastside. Lol.
5 LEPRecon (#) May 07th, 2013 - 12:30 pm Report abuse
@4 Anglotino

My name comes from a book called 'Artemis Fowl' by Eoin Colfer, an Irish author. It stands for: Lower Elements Police (LEP) Reconnaissance (Recon), or as it is also known: leprechaun!
6 willi1 (#) May 07th, 2013 - 01:08 pm Report abuse
liars! all incompetent people in the imf. arg is different from the rest of the world. all what is bad for the rest of the world is good for arg, especially for me: CFK and my governmental gang members, including my son´s youth gang.
inflation is good because we can buy less and so don´t become so fat.
peso is better than dollar because we speak spanish, not english.
we don´t need shools and education because we like to stay stupid. especially in the government.
7 Yuleno (#) May 07th, 2013 - 01:09 pm Report abuse
LEP you write like a leprechaun and I thought it was from there.
Nothing has changed my mind. But you don't have a pot of gold either and you did have that going for you.So you post nonsense(it is lacking in sense) and you are poor.All you have is nursing.Oh dear.
What should Osborne have done a year ago?
8 yankeeboy (#) May 07th, 2013 - 01:53 pm Report abuse
I can't imagine after all of this time Argentina will relent, start producing real inflation stats and restate back to 2007.
They're is just too much of the “Chinese like growth” myth that would publically embarrass the bag lady from BA and destroy the cross eyed wonder's legend.
So in Oct, IMF will sanction and if CFK is still aound move for expulsion
Now all of this may be put on hold if the gov't changes
which I expect it will...soon and violently
9 willi1 (#) May 07th, 2013 - 04:04 pm Report abuse
@8: “... if the gov't changes...”
not with this conglomerate auf opposition parties who are also looking for their own pockets. if ck offers some of them some millions they will vote for her. all!
10 LEPRecon (#) May 07th, 2013 - 04:40 pm Report abuse
Oh look Yuleno has crawled out from under his rock.

Someone who supports turfing native Amerindians from their land, because it's not like they're human or anything.

That about sums you up Yuleno.

As for Argentina, it's screwed. It's even more screwed than any other time in its history, and the current government is going to make this default one to remember. Of course, the only people who will be affected by this are Argentinians. The people whose pension funds CFK and her gangsters have stolen. So this default is against the people of Argentina, with CFK charging full speed ahead to ensure that Argentina never again rises from the ashes.

The way she acts, anyone would think she was being paid by a foreign government to ruin Argentina.

Soon the IMF will get fed up of CFK and her antics and kick Argentina out of the IMF. That means you can forget getting any loans from the World Bank or anywhere else, as Argentina's credit rating will be reduced to junk status, somewhere along the lines of Somalia. The only difference is that Somalia is trying to claw its way out of the abyss, where Argentina seems to be eagerly rushing towards it.
11 yankeeboy (#) May 07th, 2013 - 05:07 pm Report abuse
BUENOS AIRES, Argentina — Cristina Fernandez has rejected any currency devaluation while she's president of Argentina, and is dismissing as election-year politics a brewing scandal over allegations of money laundering by businessmen close to her and her late husband Nestor Kirchner.

But as inflation soars, central bank reserves drop and the economy slows, Argentines are losing faith in the peso, and in her leadership.

New polls show she's lost more than half the support she had when re-elected, including a 10-point ratings drop in the days since a scandal broke over allegations that Kirchner ally and businessman Lazaro Baez spirited millions in cash out of Argentina in private planes.

Fernandez waved off the trouble Monday night, but faced new trouble Tuesday as union boss Hugo Moyano launches a political party, taking away more supporters.

The end is nigh
12 ChrisR (#) May 07th, 2013 - 05:19 pm Report abuse
11 yankeeboy

And the sooner the better so we can all deal with it and put it behind us. But will the new lot be any better than this lot. NFC.
13 reality check (#) May 07th, 2013 - 06:04 pm Report abuse
The IMF always puts me in mind of the story of the, “Boy who ride wolf!”

Just exactly what do you have to do before they impose sanctions, because frankly, I am bemused! It almost seems as if theft are afraid!
14 briton (#) May 07th, 2013 - 06:18 pm Report abuse
IMF Warns

Why not IMF gives CFK 5 billion to reply,
Fools idiots and weirdoes.

Or just call it,
International Argentine fund,
Simple. Simple

And that why CFK just laughs at the IMF.

15 Yuleno (#) May 07th, 2013 - 06:51 pm Report abuse
Are you in B A yankeeboy or are you trying to make your post appear more authentic.
Well you have failed.It is just the usual claptrap of a neoliberal non intellectual.Can't you balance your posts with less money indices as your bases as that is insufficient.Many countries survive monetary difficulties as predatory capitalist ply their trade.
LEP,your drivel is commonly called ranting.I have never posted that indigenous rights do not need respecting.You need to get this matter sorted in your head.
Where do you stand on UK immigration policy and its history and current policy in good old Northern Ireland.
16 TroLLey_to_Truth (#) May 07th, 2013 - 07:00 pm Report abuse
I would say the world economy was destroyed in 2008. Thanks to the USA, Britain, Spain, Iceland, Greece, and now basically the rest of Europe.

Good job dummies.
17 LEPRecon (#) May 07th, 2013 - 07:05 pm Report abuse
@15 Yuleno

As usual you don't comment on the content of this article, just try to obfuscate the topic.

I do remember you posting that the native Amerindians in Argentina had no rights because, according to you, they originated from Chile, despite the fact that their ancestors were there before the Europeans turned up and started carving up their lands between them.

But what do you think about the topic of this news article? Argentina once again getting a ticking off, and will soon face sanctions or even expulsion.

However, that seems irrelevant now that the peso is trading at more than 10-1 on the US dollar.

Devaluation is inevitable now, and the people of Argentina will suffer.

Do you care about that, Yuleno? Or are you like most Argentine trolls on here and don't actually live in Argentina?
18 Tobers (#) May 07th, 2013 - 07:09 pm Report abuse

The world's economies have some major readjusting due to the unbridled greed of a few and the irresponsibility of many. Of course that applies to Argentina too.
19 yankeeboy (#) May 07th, 2013 - 07:12 pm Report abuse
Yul, that was a cut and paste from a news article.
Are you really that stupid?
You're Rg so that is probably a yes
20 TroLLey_to_Truth (#) May 07th, 2013 - 07:18 pm Report abuse
And lets not forget Japan. So it's ironic it's them criticizing Argentina, when the reason there is so much wild volatility in markets and economies and currencies is because Europe, the USA, Japan, China, etc are playing all kinds of games with THEIR currencies, because their economies are basically shit and don't know how to get out of it.
21 yankeeboy (#) May 07th, 2013 - 07:47 pm Report abuse
Wow, CFK is trying to con the Rgs into buyimg some bond to sweep up the last of the U$ in the country.
I hope nobody is stupid enough to fall for that!!

deperate animals bite and snarl
wait for it
22 ElaineB (#) May 07th, 2013 - 08:07 pm Report abuse
I love the sales pitch, “No honestly, it's legit, other countries have done it, honest”. Hilarious.
23 yankeeboy (#) May 07th, 2013 - 08:11 pm Report abuse
Yeah, he was awfully figety too, looked like a liar to me.
Those people better get on the next plane out of BA
24 ElaineB (#) May 07th, 2013 - 08:20 pm Report abuse
I am pretty certain this has been fabricated out of desperation and under pressure, late at night. It sounds like an interesting idea, in the right country, in the right economic environment, and with TRUST in the economy, and TRUST in the government.

It also tells everyone that the government is out of cash. Have they thought of juggling at the traffic lights on Av. 9 de Julio for dollars?
25 yankeeboy (#) May 07th, 2013 - 08:28 pm Report abuse
You re right, all they did today was confirm the well is dry and NOBODY wants to invest in real estate or the o/g industry.

They also just speeded up the depreciation
26 LEPRecon (#) May 07th, 2013 - 08:44 pm Report abuse
@24 & 25

I've just read about this in Clarin. They government are really desperate now aren't they?

Do they honestly believe that those people who have managed to squirrel away a few dollars for the imminent rainy day is so stupid as to suddenly just give it away to the government?

Perhaps CFK and all the government ministers should buy these bonds 1st. I mean they're the ones with the most US dollars, aren't they?
27 Biguggy (#) May 07th, 2013 - 09:02 pm Report abuse
Smells like desperation to me.
28 Yuleno (#) May 07th, 2013 - 09:44 pm Report abuse
That's how stupid you are.The Mapuche where the people I referred to as coming from Chile in relation to particular events.The Mapuche live and have lived in an area of Argentina and Chile.They have an on going struggle against the states of Argentina and more relevantly Chile,where their land is being robbed currently.
Indigenous rights are more pressing an issue , than whether a devaluation of a currency brings down a gvt.Check out what happened to the Labour gvt when it devalued in good old UK.
How is Cameron doing in the ratings and who do you think will replace him in the schizoid Tory party? Paisley?
29 ElaineB (#) May 07th, 2013 - 10:00 pm Report abuse
The press conference of Argentina's finest has not stopped the dollar climb. Astonishing. :)

Lorenzino couldn't talk me out of a burning car, let alone give him my hard earned cash. I am glad the Argentine people are not falling for it.

The best part is they have a list of people not allowed to give them money. LOL!
30 Anbar (#) May 07th, 2013 - 10:20 pm Report abuse

I got to post #6 and #7 and they are identical.

I couldnt stop laughing!
31 Ayayay (#) May 08th, 2013 - 12:23 am Report abuse
Yuleno, you seem math avoidant in your comments.
32 yankeeboy (#) May 08th, 2013 - 01:21 am Report abuse
I think they are terrified there isn't enough U$ to pay for the fuel they need to get them through the winter.

Rut Ro
33 TroLLey_to_Truth (#) May 08th, 2013 - 02:47 am Report abuse
It seems some of you need yet another free ride on the TroLLey to Truth.
34 Britninja (#) May 08th, 2013 - 03:36 am Report abuse
@33 If you had any sense you'd fill your trolley with baked beans and hide back in your basement before the soon-to-be-starving Argie cannibals try to eat your face.
35 Ayayay (#) May 08th, 2013 - 07:23 am Report abuse
36 Anglotino (#) May 08th, 2013 - 07:59 am Report abuse
Oh I just vomited in my mouth.

Now we all know Nostrils pick up line.

“Hey baby, wanna come to my parent's basement and have a free ride on my trolley to the truth?”

For Christ's sake Nostrils. Put it away. Wrong website. Isn't your keyboard sticky enough already?
37 LEPRecon (#) May 08th, 2013 - 12:21 pm Report abuse
@28 - Yuleno

Yawn. Here we go again. Backtrack, deny, etc...

When you've dug yourself into a hole, it's best to know when to stop. You don't know when to stop do you?

You don't believe that native Amerindians have right, or that your ancestors stole their land.

But none of that is actually relevant to the fact that Argentina is rapidly going down the toilet, and your currency is worth about the same amount a toilet paper. The only difference is that toilet paper has a use.
38 Yuleno (#) May 08th, 2013 - 06:15 pm Report abuse
You write and not think.Hence you yawn.
You don't know what you are write about.Amerindians is not a word of Mapuche.Its origins come from the same root as America does.Use Mapuche for Mapuche.diaguita for diaguita or indigenous for the original people of the territory.Dont use the language of the colonisers if you have an issue with colonisers.Being English rather than Irish tells me you can't tell colonising from occupying.Stop yawning and look where your feet are.There might be holes in your path.

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