MercoPress. South Atlantic News Agency
Argentina's debt expected to peak at 65% of GDP by end of 2018
The International Monetary Fund (IMF) expects Argentina’s government debt to peak by the end of 2018 and then fall as the country cuts its deficit as part of its US$50 billion deal with the Fund, according to a document published. Read full article
Comments
Disclaimer & comment rulesOf course. Today it's bad, tomorrow will be worse, but some day, somehow, things will finally be better.
Jul 16th, 2018 - 08:54 pm - Link - Report abuse -1Typical neocon mantra. Let us become super wealthy first, then when we are tired of being rich (if we are ever) we'll trickle down some freebies your way.
IMF Managing Director Christine Lagarde won't spare efforts to prop the Macri government.
It is educational to read Lagarde's words in a May 18 press release:
”This will be Argentina’s economic program (that) would include creating a clear path to strong, sustained, and equitable growth and robust job creation, (implement) a clear macroeconomic program that lessens financing needs and puts public debt on a firm downward trajectory.“
Madame: You can't believe this fluff. There has been not a single move towards sustainable growth in Argentina in the last 30 months -- only some ephemeral, debt-supported growth.
Hundreds of thousands of quality positions have been lost as thousands of small and medium size manufacturing enterprises and retail businesses close down. Macri has de-financed the country by lowering taxes and export taxes on the wealthy, by keeping an overvalued peso and by allowing unrestricted capital flight.
Lagarde could not end her release without adding insult to injury: ”and importantly, protecting society’s most vulnerable during this transition.“
The record indicates that the IMF -- and Macri for that matter -- care little about ”society's most vulnerable.”
Just a few days ago, riots prompted Haiti prime minister's resignation after petrol prices went up by 38 per cent, diesel by 47 per cent and kerosene by 51 per cent.
The government had removed fuel subsidies as part of an agreement with the IMF.
Enough said.
The imf is no one's friend.
Jul 16th, 2018 - 08:57 pm - Link - Report abuse 0@EM
Jul 16th, 2018 - 10:09 pm - Link - Report abuse -1Hey, they're not all bad. Even the IMF wants Macri to stop cutting export taxes on soy!
Reekio,
Jul 17th, 2018 - 05:24 pm - Link - Report abuse +1“Macri has de-financed the country by ... keeping an overvalued peso ...”
Overvalued? So why were you so upset about the peso's recent devaluation? Do you now think it was a good thing?
@DT
Jul 18th, 2018 - 04:24 am - Link - Report abuse -1I know! It just happens that the pupil, Macri in this case, may be surpassing the teacher.
And so these apprentice witches mentioned they may do what the IMF wants, and on the same day there were some phone calls and some public declarations of the Rural Society, and about 12 hours late Dujovne said the matter had been abandoned -- the government will do some cuts elsewhere to make up for the soy taxes...and you can guess where -- not among the estancieros this time.
Smart those who know who is in charge.
ZB,
I'm not surprised you are confused. The thing is, no matter what the Macri government does, the effects are deleterious to the Argentina economy.
EM,
Jul 18th, 2018 - 06:00 pm - Link - Report abuse +1“I'm not surprised you are confused.”
I am confused because you are contradicting yourself. You railed against Macri because of the peso devaluation and now you are criticising him for “keeping an overvalued peso”. Do you see the inconsistency?
“The thing is, no matter what the Macri government does, the effects are deleterious to the Argentina economy.”
So, in Reekieland, anything Macri does = bad. Therefore the devaluation of the peso was bad even though it remains overvalued (also bad).
It takes a special sort of brain to be able to reconcile two mutually exclusive arguments as being consistent with each other. Are you a creationist too?
ZB
Jul 19th, 2018 - 08:53 pm - Link - Report abuse 0OK, I will try to explain you.
The Argentine government has tried to keep the peso from plunging to its death by selling unprecedented amounts of dollars from reserves in spite of its promises to let if float at the market's whim. An overvalued peso means it's cheaper to import than to produce nationally (Argentina imports many components to do so). This kills domestic manufacturers, mostly small and medium size entrepreneurs. On the other hand, a cheaper dollar allows more tourism abroad, which causes the Central Bank to sell more greenbucks to satisfy the demand. As you probably know, Argentines are also known for buying American currency if they have any extra cash.
Now, when the dollar flies high above our heads, the large agri-food producers get more bang for their buck, but local prices will closely follow the dollar's value, they'll go through the ceiling, prices will follow and inflation shoots up.
In a more normal situation, that is, when people with brains are at the helm, governments look at balancing the needs of the different sectors and introduce calculated corrections to keep things in check.
So now you may have an inkling as to why Macri's erratic, contradictory and unplanned measures are pushing Argentina closer to the edge with each passing day. That is, unless you are still living in Macriland, where all goes well and things are painted in yellow and pink tones.
EM,
Jul 24th, 2018 - 05:11 pm - Link - Report abuse 0“OK, I will try to explain you.”
Thank you.
“The Argentine government has tried to keep the peso from plunging to its death by selling unprecedented amounts of dollars from reserves in spite of its promises to let if float at the market's whim. An overvalued peso means it's cheaper to import...”
OK, with you so far. So a high peso is bad and although the naughty government said they'd let it float they intervened.
“Now, when the dollar flies high above our heads, the large agri-food producers get more bang for their buck,”
So, a low peso helps Argentina's main industry.
“but local prices will closely follow the dollar's value, they'll go through the ceiling, prices will follow and inflation shoots up.”
...but not the locals.
“In a more normal situation, that is, when people with brains are at the helm, governments look at balancing the needs of the different sectors and introduce calculated corrections to keep things in check.”
So they shouldn't let it float and intervene when the value drops too low.
“So now you may have an inkling...”
Yes, all now clear. Your problem was not with the peso dropping in value while being overvalued, but the fact that the Macri intervened when he said he wouldn't and you think he should have intervened all along. Got it. Thank you.
@ZB
Jul 24th, 2018 - 11:05 pm - Link - Report abuse 0Oh, come on. I admit EM is not making the most coherent case, but you must know that both an overly high currency and a rapidly devaluing one can have a negative effect on the economy. It was Macri's foreign borrowing that propped up the peso vs the dollar and probably contributed to the negative trade balance, and that borrowing also left Argentina in a very vulnerable position that lead to the recent currency panic. It would have been much better to see the peso gradually devalue over a year than suffer a sudden drop.
And agri-food is not Argentina's main industry. Farming is only 10.9% of the economy according to the CIA factbook, while services are 60.9%.
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!