MercoPress. South Atlantic News Agency

IMF mission in Argentina to check financial system, in framework of G20

The mission together with World Bank official will remain in Argentina two weeks

Officials from the International Monetary Fund and the World Bank arrived in Argentina on Tuesday to evaluate the country's financial system as part of checkups agreed among Group of 20 nations, according to a report from the official state news agency, Telam.

Argentina belongs to the G20 and to the IMF, but in the last five years it has refused to allow the Fund to carry out routine annual evaluations of economic conditions for political reasons.

The Argentine government blames IMF policies for precipitating the country's devastating 2001-02 economic crisis and its sustained recovery since then for turning its back on IMF suggested policies.

Officials may also have wanted to stave off criticism over the government's widely discredited inflation data, which the Fund censured last month.

The technical mission will stay in Argentina for two weeks, Telam said. According to the IMF website, G20 countries agreed to undergo evaluations every five years under the so-called Financial Sector Assessment Program.

In related news, official data showed that Argentina posted a primary budget deficit of 4.37 billion Pesos (888 million) in 2012, marking the first such deficit since 1996.

The government of President Cristina Fernandez said the deficit reflected counter-cyclical spending to fend off the impact of global economic sluggishness.

The primary budget balance, which shows government finances before debts are paid, showed a surplus of 4.92 billion Pesos in 2011. The government had forecast a primary budget surplus of 11.54 billion pesos in 2012, according to estimates included in the 2013 budget.

“In light of the deterioration in the international situation, fiscal policy had a counter-cyclical objective in 2012,” the economy ministry said in a press statement.

A sustained economic boom in Argentina stalled in 2012 due to weak global demand, high inflation, a drought-hit grains harvest, poor performance from its main partner, Brazil and the impact of government import and currency controls on investment.

The administration of Cristina Fernandez' has used high state spending to sustain domestic demand and economic growth in Argentina, but analysts say that strategy is losing steam. The overall fiscal deficit in 2012 totalled 55.56 billion Pesos, compared with a deficit of 30.66 billion Pesos in 2011.

In December alone, Argentina posted a primary budget deficit of 11.05 billion Pesos, 36% up from the 8.11bn Peso deficit in December 2011. The overall fiscal deficit in December was 33.15 billion Pesos.