MercoPress. South Atlantic News Agency

IMF vows to keep working alongside Argentina

“We have to be realistic and honest: tensions will exist” with the IMF, Batakis admitted

The International Monetary Fund (IMF) has insisted on the need to keep working together with Argentina following the resignation of Martín Guzmán as Economy Minister and the subsequent appointment of Silvina Batakis.

“We look forward to working with Minister Silvina Batakis and her team to continue to support Argentina and its people in strengthening macroeconomic stability and addressing its profound challenges to lay the foundations for more sustainable and inclusive growth,” said the IMF through a statement published Monday.

The IMF also pointed out it sought to keep up the joint work, now with Batakis, who will have to deal with inflation above 70% annually, a high fiscal deficit, and a stagnant economy after restructuring a US$ 44 billion debt with the IMF this year.

The global agency stressed it will continue supporting Argentina, a country where all financial markets fell amid uncertainty stemming from the abrupt changes in the economic management and the growing financial imbalances.

“I believe in fiscal balance,” Batakis said upon taking office Monday. “We are going to follow the economic program that President [Alberto Fernández] has been setting [in place] and achieve, of course, that Argentina exports more.” Batakis also spoke of the “liberation of Argentina's productive forces”.

The Minister admitted, however, that “there will surely be some modifications” in the revisions of the agreement with the IMF and foresaw that “tensions will exist” in the next revisions of the agreement with IMF, because “the second semester is very complex” with “many” and “very strong” maturities.

“We have to be realistic and honest: tensions will exist, but we have to work together,” Batakis said Tuesday in a radio interview.

Regarding the exchange rate between the Argentine peso and the US dollar, Batakis explained that “when one looks at the multilateral exchange rate we find that Argentina is where it has to be.”

“We cannot lose competitiveness, we need our exporters to export more and not to speculate on what may happen next month, but to make the settlements they have to make,” she added.

Batakis also pointed out that after meetings with Central Bank (BCRA) President Miguel Pesce and Productive Development Minister Daniel Scioli, the government needs “the industry to be able to plan” ahead.

“We talked about having a roadmap that allows us to plan and avoid jumps in the economy that damages companies, but also the people who are distressed seeing these speculative movements that we also see in the marking,” Batakis stressed.

Regarding the current inflation rate that some fear might reach three digits by the end of 2022, Batakis claimed “inertia” was one of its “multiple causes.”

“It is understandable at some point because people try to preserve their purchasing power against the inflation we are experiencing,” the minister insisted while highlighting the importance of a pricing mechanism coordinated with business sectors, although that alone will not “stop inflation precisely because of its millicausality.”

“Expecting that a trade secretariat alone can control prices is very naive,” she added. “We have to recognize in each of the causes which are the instruments we have, some are medium term, we cannot lower the CPI to one digit in one month.” The minister vowed, however, to start a path “of falling inflation.”