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Montevideo, July 4th 2020 - 11:41 UTC

 

 

IMF positively cautious about Argentina's public policies prospects

Thursday, January 30th 2020 - 08:24 UTC
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Dealings with the IMF are key as Argentina hopes to avoid a default amid a currency crash, steep inflation and a contracting economy Dealings with the IMF are key as Argentina hopes to avoid a default amid a currency crash, steep inflation and a contracting economy
IMF did not change its economic projections for Argentina, in part due to the fact that Alberto Fernandez’s government was installed just under two months ago IMF did not change its economic projections for Argentina, in part due to the fact that Alberto Fernandez’s government was installed just under two months ago

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%.

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  • Enrique Massot

    The IMF has no option but to be 'cautiously optimistic.' It bears a part of responsibility in Argentina's indebtedness. When one party lends and another borrow, both parties must be reasonably satisfied the money can and will be paid.

    Now, when former president Mauricio Macri decided it was time to talk to the IMF, it was because private lenders had slammed the door on Argentina because they realized they had lent an incredible amount in a very short period.

    So the IMF knew there was a problem with the government ways of dealing with the economy, that is, borrowing -- and capital flight -- were the only tangible activities of the Macri administration.

    No matter. With Donald Trump anxious to help his little friend win the 2019 election, the IMF agreed to rescue Argentina by granting it its largest-ever, $57-billion loan, compromising 60 per cent of its lending portfolio.

    This was done in record short time, without the usual technical assessments prepared by IMF technocrats.

    All these factors will make the elephant in the room when discussions with Economy Minister Martin Guzman begin.

    Jan 31st, 2020 - 04:19 am 0
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