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.