MercoPress. South Atlantic News Agency

IMF positively cautious about Argentina's public policies prospects

Dealings with the IMF are key as Argentina hopes to avoid a default amid a currency crash, steep inflation and a contracting economy

Greater certainty around Argentina’s public policies could help reactivate growth and investments in the recession-hit country, the International Monetary Fund said on Wednesday.

“As new public policies are announced it will decrease uncertainty, which is very high in the Argentine economy,” said Alejandro Werner, the IMF’s director for the Western Hemisphere. “That will help reactivate growth, reactivate investments.”

Argentina is gearing up to restructure around US$100 billion in sovereign debt, including part of a US$ 57 billion credit facility that the IMF extended the country in 2018.

Dealings with the IMF are key as Argentina hopes to avoid a default amid a currency crash, steep inflation and a contracting economy. An IMF technical team will travel to Buenos Aires in February

The Fund did not change its economic growth projections for Argentina from the October estimates due in part to the fact that Alberto Fernandez’s government was installed just under two months ago, Werner said.

In a press conference in Washington, Werner said it is “premature” to estimate the economic impact of the spread of a new coronavirus that originated in China, where Argentina and Brazil export large amounts of agricultural products.

“It is going to have an effect on the economic cycle of countries that are most tied to China and obviously in the perishable sectors,” he said, noting that a similar virus scare in the early 2000’s barely altered economic growth trends in the region.

On Brazil, Werner said the Fund expects structural reforms to continue following the approval of a key pension reform.

He added that uncertainty over key pillars of the Chilean economy following weeks of street protests and the possibility of a constitutional change were behind the sharp cut to the Fund’s growth estimates for the country.

The IMF now expects the Chilean economy to grow 0.9% in 2020, down from a 3% estimate in October.

For the whole of Latin America and the Caribbean, the Fund estimates 2020 growth of 1.6% down from 1.8% in October. Global growth is seen at 3.3% this year, below its October projection of 3.4%.