The Fund is worried about polls | By the uncertainty …

The International Monetary Fund is concerned about elections. The authorities of the body warn that the outcome of the elections "could reduce the appetite for reform". "Election uncertainty" is presented by the IMF as the main internal risk for Argentina in 2019. Warnings from the head of the Department for the Western Hemisphere Fund, Alejandro Werner, n & # 39; 39 have not affected its forecasts for the country. The forecast review released today reiterated that this year would end with a decline in activity level of 1.7%. The recovery would occur in 2020, when they expected GDP growth of 2.7%.

"Among the internal risks for Latin America, there is a decline in confidence due to political uncertainties in Brazil and Mexico, as well as uncertainties related to the elections in Argentina," Werner said in an article posted on the blog Dialogue in the Background. "In Argentina, the general elections of 2019 could reduce the appetite for reform," said a senior official of the multilateral organization. IMF disbursements are subject to compliance with a strict fiscal and monetary adjustment program, but the agreement also undermines a set of "structural reforms". Among the elements suggested by the Fund are the reform of the workforce and the reform of the pension system.

"The government's stabilization plan has helped ease the financial turmoil and stabilize the exchange rate," Werner said. Although the Fund has reached its highest level in 27 years in 27 years, the austerity program will be accompanied by a slow reduction in price increases that will translate into improved purchasing power. "Inflation and inflation expectations have been trending down since October, and all indications are that they would continue to decline slowly in 2019. This would allow for a gradual reduction in the interest rate badociated with inflation. an increase in real wages and exports, this would generate a recovery in economic activity from the second quarter of 2019, "said Werner. In the logic of the agency, the increase in real wages would not be done by the joint but by lower price increases. To this, the IMF adds a drop in rates and an increase in exports to reach "a recovery from the second quarter".

The agency also hopes that the neoliberal program announced by Jair Bolsonaro in Brazil will boost growth. This is why he raised his forecast for the neighboring country from 2.4 to 2.5%, from 2.4 to 2.5%. "The new government's pro-market reform program has helped boost business confidence and improve the country's growth prospects in the short term, with growth expected to exceed 2% in 2019 and 2020 for the first time since 2013", indicates the report prepared by Werner.

But the IMF does not discriminate. Although he does not hide his enthusiasm with Bolsonaro, the body warns that "market confidence could deteriorate if it does not advance pension reform or fiscal consolidation". Werner's concern is that "the fragmentation of the Congress could create obstacles to the implementation of the ambitious program of structural reforms." If it continued, political uncertainty could discourage investment and jeopardize growth prospects. of the region. "