IMF considers agreement with Argentina possible | …

The IMF again refers to a financing agreement with Argentina before May, on the proposal of the Minister of the Economy, Martín Guzmán. “It is important to have a broad program that seeks to balance between fiscal and financial restoration, on the one hand, and on the other hand continue to hold the beginning of the economic recovery after the devastating effects of the pandemic. It’s ambitious but it is possible, ”said Alejandro Werner., director of the agency’s Western Hemisphere department. In addition, he stressed that the recovery of the national economy at the end of 2020, as well as that of Brazil and Peru, was better than expected.

The The Fund ratified its growth forecast for Argentina’s economy of 4.5% in 2021, which was already planned at the end of January. This implies a decrease from the 4.9% calculated last October. Meanwhile, the region is expected to grow 4.1% this year, an improvement from the forecast of 3.6% last October. This increase in the regional forecast is explained by the end of 2020, which was less bad than expected, as well as the prospects for the vaccination process, stronger growth in the United States and better prices for raw materials.

In any case, the IMF recalled that 17 million people fell into poverty in the region in 2020 and hopes that it is only by 2025 that the region will be able to return to levels of per capita income. before the pandemic.

Werner considered that this year the region will experience dynamic economic growth, although this result will be closely linked to the evolution of health variables. The growth prognosis, as proposed, assumes a reduction in the number of infections and mortality and less saturation in hospitals, due to the positive impact of vaccination processes.

The improvement of forecasts for the region are part of a more positive outlook for the global economy than expected a few months ago. Compared to its October 2020 estimate, the IMF now expects the global economy to grow 5.5% this year, down from the 5.2% that was estimated at the time.

Negotiations with Argentina

Asked about the fact that in 2018 the IMF approved the mega-package of aid to the government of Mauricio Macri and that in such a short time the country is seeking to renegotiate said loan, Werner analyzed the following: “The Latin America is so dependent on the export of primary products that the fall in prices in recent years has caused a decline in income, which has led to the implementation of various policies and fostered the changes in political cycles that we have seen. Democracies have continued to function, but society is looking for options. In this context, our teams must understand and be open to negotiating economic programs where the priorities of the various governments for which the companies have voted are taken into account ”.

The agency expects Argentina’s economy to grow 4.5% in 2021, following 2020’s estimated decline of 10.4%. Asked about the country’s inflationary situation, which is still fertile ground for the Fund to fuel pressure on fiscal adjustment, Werner has shown logical caution in the context of negotiations with national authorities. He just said that “We are working with the Central Bank and the Ministry of the Economy to try to understand what are the reasons for the inflationary increase”.

Regarding the idea that the government slipped on increasing withholding taxes on agriculture to contain domestic food prices, the IMF official said that “most It is important to have a fiscal and monetary policy based on a medium-term framework aimed at stabilizing prices., instead of operating directly on specific prices. Although more specific studies must be carried out ”.