Buenos Aires Weather | IMF chief: No alternative to deal with Argentina

IMF Managing Director Kristalina Georgieva has warned there is “no alternative” to Argentina’s ongoing deal with the Washington-based crisis lender, warning that the country’s fight against inflation and poverty would continue without a deal.

“Our main objective is to get Argentina out of this very dangerous path of high inflation,” she told reporters on Thursday.

“We know that inflation is a tax on the poor,” Georgieva said, commenting on Argentina’s runaway price increases, which total more than 50% a year. The IMF chief also insisted that the gap between the black market and official exchange rates was “in the wrong place”. and at the moment it is close to 50%, the IMF chief said, insisting that the black market exchange rate against the official rate “is not in the right place”.

Last Friday,

Last week, President Alberto Fernández announced that Argentina and the IMF had reached a preliminary agreement to renegotiate $44.5 billion in debt in exchange for economic reforms, although more negotiations are yet to come.

Georgieva said these talks offered a way forward for Argentina and that without an agreement, poverty would increase, especially among children.

“Let’s focus on getting a deal and then stick to it,” said the Bulgarian economist. “What is the alternative? The alternative is nothing.”

Without it, she continued, the situation would only deteriorate, “continuously increasing poverty, including child poverty.”

“Our team is very focused on getting the best for the country,” she added.

The basic tenets of the original deal – which the IMF called a “deal” – saw Argentina commit to gradually reduce its budget deficit, commit to lower inflation and revise its exchange rate and its monetary policy, including the financing of the Treasury, among other points. It will be reviewed quarterly by the Fund.

‘Pragmatic’

Georgieva said it was a “pragmatic program” and could be adjusted during her period.

“In other words, if we can do more, we will do more, which will help Argentina solve the most important structural problems,” she said, highlighting these as “taxes and public expenses”.

“We want to see more revenue [come in] in a way that is sustainable over time” and “we want high quality spending, more transparency,” said the IMF chief, noting that an assessment of public investment management is being prepared with the World Bank and that these recommendations would be taken into account. consideration.

The new deal will replace the stand-by deal signed in 2018 by former president Mauricio Macri. It was initially worth US$50 billion and was increased to US$57 billion, of which Argentina received US$44 billion. President Alberto Fernández refused to accept the remaining tranche of the loan when he took office in December 2019.

The main difference between the current agreement and its replacement is the terms of payment. While the agreement signed four years ago charged the heaviest repayments between 2022 and 2024, the new agreement will see them spread out between 2026 and 2032.

Argentina has pledged to cut its budget deficit by 0.9% of gross domestic product in 2024 under the new deal, with reduction targets of 1.9% in 2023 and 2.5% in by 2022, according to the government. It also forecasts a US$5 billion growth in the Central Bank’s international reserves in 2022, which currently stand at just over US$38 billion.

Once an agreement is finalized, it must be ratified by Argentina’s Congress and approved by the IMF’s Executive Board.

Georgieva declined to speculate on what would happen if lawmakers reject the deal.

– TIMES/AFP

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