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Montevideo, May 21st 2019 - 19:20 UTC

IMF mission arrives in Argentina: Central bank policy, inflation and revenue in the agenda

Wednesday, May 8th 2019 - 12:54 UTC
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The IMF team is headed by Roberto Cardarelli who has been guiding negotiations and is scheduled to meet with government and Central bank officials The IMF team is headed by Roberto Cardarelli who has been guiding negotiations and is scheduled to meet with government and Central bank officials
It was also announced that the head of the IMF Western Hemisphere Department, Alejandro Werner will also be arriving, later, for some of the meetings It was also announced that the head of the IMF Western Hemisphere Department, Alejandro Werner will also be arriving, later, for some of the meetings
The mission is expected to collect data and monitor the performance of the stand-by agreement, particularly allowing the Central Bank to invest in support of the Peso The mission is expected to collect data and monitor the performance of the stand-by agreement, particularly allowing the Central Bank to invest in support of the Peso

A new IMF mission is expected in Argentina this e Wednesday for the fourth review of the country's economic plan which is supported by a 36 month stand-by credit from the multilateral financial institution. It's the first IMF visit since Argentina's Central Bank major strategy change in the foreign exchange market to avoid another meltdown of the Argentine currency.

The IMF team is headed by Roberto Cardarelli who has been guiding negotiations with Argentina and is scheduled to meet with government and Central bank officials, as well as representatives from the private sector, academia and community. In his previous visit Cardarelli also met with opposition presidential hopefuls and union leaders.

It was also announced that the head of the IMF Western Hemisphere Department, Alejandro Werner will also be arriving, later, for some of the meetings. Werner has been in Argentine on several occasions.

The mission is expected to collect economic information and monitor the performance of the stand-by agreement, particularly the latest understanding allowing the Central Bank to invest the necessary funds in the event of a run against the Argentine Peso.

This was decided since Argentina is holding presidential elections next October, and the situation is very volatile given the economic recession, loss in confidence and deterioration of the labor market.

Originally IMF technical staff and even Managing Director Christine Lagarde were contrary to have IMF funds used by the Central bank to avoid such a situation in the foreign exchange market.

The decision was finally reached after long discussions between IMF technical staff, Argentine Central bank experts and even direct phone talks between Ms Lagarde and Argentine president Mauricio Macri.

Finally it was agreed that the Argentine central bank could intervene when the maximum and minimum range of floating bands were surpassed, which so far has not happened. Apparently the sale and export of Argentina's abundant crop has helped with foreign funds to meet local demand for the greenback.

However one of the issues the IMF is expected to review and insist in its visit on Wednesday is tax revenue which is below the estimates originally agreed mainly because of the extent of recession and drop in cautious consumers' confidence. A possible new tariff on imports could be in the pipeline.

Another issue is inflation which is running at an annual 50%, as well as an invitation to all political forces in Argentina to help address the current situation and ensure a commitment to honor IMF's credit and the country's foreign debt in case of a change of government next October.

So far all hopefuls, including the feared Cristina Fernandez and Kirchnerism, have publicly and privately pledged they would continue with the country's overseas obligations. Likewise the IMF, in its previous visit admitted that the current stand-by credit could in effect be renegotiated in 2020, no matter who wins in October, and heads the Argentine government for the next four years.

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  • Enrique Massot

    Cardarelli: Argentina's true economy minister. Working to see how on hell they give Mauricio Macri a chance -- any chance -- of winning the October presidential election.

    The task appears difficult as the economic crisis has reached a point of non-return and Macri decides to invite ”feared (feared by whom, MP?) Cristina Fernandez and Kirchnerism“ to a national dialogue -- not long after calling her ”corrupt“ and considering to jail her.

    Macri will go down in history books as the guy who sank the country into a dark hole quicker than any of his predecessors.

    The guy who claimed to want to protect the ”Republica” will also be remembered for causing the deepest rot in the Argentine justice system, forcing judges to resign under threats and designating friendly characters at their place -- so that he could decide who would be jailed, usually members of the previous government on mostly fabricated accusations.

    May 08th, 2019 - 04:40 pm -1
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