An IMF team is back in Buenos Aires to review the Argentine economy performance and how it is complying with the fiscal and monetary conditions established in the stand-by US$ 57 billion loan agreed last year. The head of the mission Roberto Cardarelli is scheduled to meet ministers, central bank officials, members of Congress from the ruling coalition and opposition, academia and different lobbies.
The main event will take place next Friday when the provincial finances, fiscal solvency and compliance with agreed conditions are to be analyzed. This refers specifically to freezing outlays, no staff contracting or tax increases.
Apparently the major devaluation of the Peso when it lost half its value against the US dollar last year, plus the increase of oil and gas, particularly for Patagonia provinces, has helped at least 17 of 24 governors to seek reelection this year with finances reasonably balanced and no extraordinary requests of funding from the central government.
Provinces are complying with the conditions agreed and the situation is now positive, with several of them helping to jointly manage a 1% of GDP surplus, according to sources from the Interiors and provinces ministry. In fact apparently only one, Santa Cruz has a primary deficit condition, among those provinces that still have financial difficulties.
In Buenos Aires, Finance minister Nicolas Dujovne and Central Bank president Guido Sandleris are quite optimistic about the results of the review since in effect the IMF loan and program based in strengthened monetary and fiscal policies have helped to lessen the financial turbulences and stabilize the foreign exchange rate.
We believe, and so thus the IMF, we believe, that with lower interest rates a recovery of the Argentine economy, beginning in the second quarter, can be expected, according to Finance sources.
Once the IMF mission ends its round of contacts and collection of data, it will address a report to the IMF directory, which will then decide whether to release or not, another leg of the stand-by loan, which is vital for Argentina in a highly political and volatile year, because of presidential and congressional elections.