IMF. Recommends to accelerate reforms and warns against political uncertainty

WASHINGTON.- The International Monetary Fund (

MFIs

) called on Latin American countries to accelerate the implementation of structural reforms aimed at stimulating growth by presenting a more pessimistic regional landscape in which Mexico and Brazil will experience growth of less than 1% this year, and Argentina is striving to recession triggered by the 2018 currency race.

Alejandro Werner, director of the IMF's Western Hemisphere Department and senior official for Latin America, told Washington that he was presenting the agency's latest forecast for the region: "structural reforms remain imperative and must be accelerated to stimulate potential growth. "

"These reforms must include greater openness of economies to trade and foreign direct investment, more flexible regulation of product and labor markets, greater competition and improved quality of human and physical capital," he said. declared.

Werner summed up his vision under a favorable title: "A stagnant recovery".

Although the IMF's recommendation to implement structural reforms is far from new, it has a particular connotation for Argentina in the middle of the presidential campaign and the antagonistic vision presented by the two favorites, the president,

Mauricio Macri

and the presidential candidate of Frente de Todos,

Alberto Fernandez

. with regard to the need for a range of measures, including pension reform, greater openness of the economy, labor market flexibility and a change in the tax system.

David Lipton, Acting Executive Director of the IMF, had already focused on structural reforms when the Fund's board of directors approved the latest US $ 5,400 million disbursement to Argentina. .

"Strong implementation of IMF-backed program policies will be key to continued progress As macroeconomic stability deepens, political efforts need to be more focused on revitalizing structural reform plans," Lipton said. . release

Werner also warned that "the great uncertainty surrounding the economic policies of some important economies in the region has also contributed to the weak growth momentum". And, referring to endogenous risks in the region, he listed three of which two seem to be adapted to Argentina. "The main internal risks include an increase in the uncertainty of economic policies, the reversal of reforms and natural disasters," he warned.

Economic activity in Latin America and the Caribbean continues to grow slowly. For 2019, the Fund expects GDP growth of 0.6%, the lowest rate since 2016, followed by 2.3% in 2020. In Argentina, the agency expects a decline of 1.3% in its gross proceeds this year and a soft recovery of 1.1% next year, more than one point less than its latest forecast because of the resistance it has shown. inflation

Referring to Argentina, Werner said the economy would improve thanks to the rebound in agricultural production and the gradual restoration of consumer purchasing power after the sharp drop in real wages last year.

"Inflation should continue to decline, but as inflation is more persistent, real interest rates are likely to remain higher for longer, which explains the downward revision of growth in 2020" , he explained. Werner