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IMF's Gopinath to hold key meetings in Buenos Aires

Wednesday, February 21st 2024 - 10:45 UTC
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Gopinath is to meet Milei, other government officials, and private businessmen for a first-hand glimpse of the country's situation Gopinath is to meet Milei, other government officials, and private businessmen for a first-hand glimpse of the country's situation

International Monetary Fund (IMF) Deputy Managing Director Gita Gopinath is due in Buenos Aires this week for meetings with President Javier Milei, Cabinet Chief Nicolás Posse, and Economy Minister Luis 'Toto' Caputo.

According to an IMF statement, Gopinath “will travel to Argentina this week to meet with government officials and others to learn about Argentina's difficult economic and social challenges, as well as its enormous potential.”

It will be the second official encounter between Gopinath and officials of the current Government, after the Davos Summit, after which the IMF board agreed to a US$ 4.7 billion disbursement. They had also met before Milei's inauguration.

The IMF supports Milei's chosen course of action but warned there would be “stagflation” (recession plus inflation) in the short term. This year, “inflation will accelerate in the short term as relative price misalignments and other price controls unwind, although disinflation is expected to begin shortly thereafter, based on the implementation of restrictive policies”, the Fund highlighted.

At the same time, the IMF estimated an average inflation of 230% and 150% at the end of the year, and a 2.8% drop in the economy, in its latest revision of the World Economic Outlook, released earlier this month.

“In the short term, the economy is expected to enter a period of stagflation, as relative prices are corrected and fiscal and external flow imbalances are drastically reduced. Inflation is expected to decline gradually after an initial burst,” said the IMF in its staff report on Argentina.

In addition, the IMF advocated reinforcing support for the most vulnerable, ”given the very delicate social situation, with already high poverty rates, and the fact that stabilization will be associated with (more) short-term economic costs“. Therefore, ”social assistance through family allowance and food stamp programs should be strengthened as needed,” it said.

Gopinath is also scheduled to meet Central Bank President Santiago Bausili and other economists and private businessmen for a first-hand glimpse of the country's situation. She had also met with Caputo and Posse in Washington DC before Milei's inauguration.

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