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IMF says it can live with another possible government of Cristina Fernandez

Tuesday, May 14th 2019 - 11:12 UTC
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“We have nothing to fear”, said Roberto Cardarelli, following a meeting with representatives from the powerful unions' umbrella organization, CGT “We have nothing to fear”, said Roberto Cardarelli, following a meeting with representatives from the powerful unions' umbrella organization, CGT

The head of the IMF mission currently in Buenos Aires for the fourth review of the economic program signed by the administration of president Mauricio Macri last year, said that the Fund does not fear a possible return of ex president Cristina Fernandez to office.

“We have nothing to fear”, said Roberto Cardarelli, following a meeting with representatives from the powerful unions' umbrella organization, CGT, and the strongest in the country.

Cardarelli is on the fourth trip of the IMF mission to Argentina since May 2018 when IMF and Argentina agreed on the terms of a standby credit of some US$ 56bn extending until 2020, and which was geared to help Argentina overcome a run on the currency and a depletion of central bank foreign reserves.

But this fourth visit occurs in the midst of the electoral climate in Argentina, since voters next October will decide whether Macri's aspirations for a second four-year consecutive term crystallize. A situation increasingly in doubt given the very poor economic indicators, pointing to a recession, high inflation at an annualized 54.7%, and shrinking jobs market.

This has had an impact on the overall confidence of financial markets, which have seen risk rates balloon, and an ongoing erosion of the Argentine currency vis-a-vis the US dollar. But despite this scenario, Mr. Caldarelli sounded optimistic and was quoted saying that “the worst is over”, in reference to the adjustment of the Argentine economy.

“Growth should improve and inflation is expected to decrease in coming months. Clearly risks are still around but we believe that the worst is over”, argued the IMF official adding that data from the second quarter “should reflect that the Argentine economy is rebounding and starting to grow again. Things are not as bad as they look”

Asked particularly about a possible comeback of ex president Cristina Fernandez, (2007/2015) who so far has not made official her bid, but most analysts believe she will try again to reach Casa Rosada, Caldarelli strongly affirmed that for the IMF “there is no fear with a possible return”.

In the middle of this situation president Macri last week invited leaders of the opposition, business organizations, unions and the Church to participate and reach a basic 10-point agreement, described as “essential” to clarify any possible doubts about the course of Argentina, since investors are reluctant and uncertain about the future following October's presidential election.

One of the points refers to the Argentine foreign debt, and honoring payments, including the IMF credit support, and thus the government insists on an official commitment from all sectors involved and invited to the discussions. So far replies have been tepid but there has been no drastic refusal to an understanding for the future or rejection of the foreign debt.

Cardarelli in Buenos Aires since last week has already met with government officials, Central bank staff as well as with representatives from the opposition, private sector, academia and labor unions.

Asked about his meeting with the unions, economist Caldarelli said “talks had been very positive and useful, as in previous occasions”. As part of the agreement signed with the IMF the Argentine government must reach a primary fiscal balance, (that is before honoring debts and interest payments), which so far despite the strong recession, Macri and his economic team have managed to achieve. Likewise after long discussions, IMF has also back tracked in its original demand that the Fund's resources should not be used to contain a run of the volatile foreign exchange market.

Categories: Economy, Politics, Argentina.

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  • Zaphod Beeblebrox


    “All things taken into account, the IMF would be better off with Cristina, whose government always paid in time.”

    You must be joking! So we just imagined it when CFK (illegally) refused to pay back the “vulture funds”?

    May 15th, 2019 - 04:28 pm +1
  • Skip

    The whole world can live with another CFK government simply because Argentina has very little influence or effect outside its own borders anymore.

    May 16th, 2019 - 07:51 am +1
  • Zaphod Beeblebrox


    ”I was thinking of legit payments to the IMF, the Paris Club and other international credit organizations. Obviously I forgot to include the (sound pitos, repiques and balabans) Illegal! refusal to pay a ransom extorted by a group of financial gangsters supported by an obviously biased NY judge.“

    I know it was unfair, but unfortunately the law was not on Argentina's side in this case so it was never going to win this one.

    ”I can see how you must have celebrated when president Mauricio Macri paid the vultures more than what they had asked.“

    No, I didn't celebrate, but Argentina was never going to win that battle, Macri recognised it and cut their losses. If CFK had done the same some years earlier, Argentina would have saved itself a LOT of money.

    ”Too bad your hero is now close to riding off into the sunset”

    He is not my hero and he made a lot of mistakes, but did some things well (see my previous postings on aspects of the Argentine economy that have improved - that you never respond to). CFK on the other hand was a complete disaster who created the mess that Macri was unable to fully resolve. Argentina should try and choose the most capable person of fixing their economy (who may not be Macri) rather the person most capable of making things worse again. CFK's track record showed that she did everything wrong - her delays with the “vultures” cost Argentina a lot, her attacks on the farmers screwed up a major driver of the economy, her isolationism messed up the balance of trade and she hid how badly the economy was doing by cheating the statistics.

    May 16th, 2019 - 05:09 pm +1
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