IMF warns high inflation in Argentina will limit job recovery and called for macroeconomic measures to reduce it

The director of the Western Hemisphere Department of the International Monetary Fund (IMF), Alejandro Werner, said high inflation in Argentina is worrying and is limiting the recovery in employment.

“Obviously, an economy with high inflation is cause for concern, it has been high for 4 years. To lower it, it is necessary to implement conducive macroeconomic policies and measures that help coordinate expectations at a lower level. “Werner answered a question from Infobae during a virtual press conference he gave from Washington.

“Part of the discussions with the Central Bank and the Ministry of Finance revolve around these measures to move Argentina forward towards lower inflation and a more stable financial sector, lower rates and that this allows a more recovery. dynamics of the economy. Employment “He said, without mentioning measures such as those adopted by the government yesterday for AFIP inspectors to control price increases, which have already failed in the past.

Regarding the movement restriction measures announced yesterday by the government, he said that in the country’s forecast “we integrate that contagion levels will be high. We have seen in Argentina and other countries they are worse than expected; We’ll see how these distancing measures affect the economy, but they represent a downside risk. We have to be careful and wait, because at the same time the economies have adapted better to the pandemic than we thought ”.

Regarding the closing of negotiations with the government to reach a new agreement, he explained that “The negotiation and the technical work have advanced in a very important way and can be closed as long as it is decided now, the moment is a decision of the Argentine government. They will decide the best time “

The negotiation and the technical work have advanced in a very important way and can be closed as long as it is decided now, the moment is a decision of the Argentine government. They will decide when is the best time (Alejandro Werner)

Regarding the use of additional special drawing rights (SDRs) to be issued by the IMF, which will allow the government to have about $ 4.3 billion this year, he said “they will supplement central bank reserves. “, so they could be used to pay off debt with the agency.

The Argentine-Mexican official assured that Latin America suffered the worst fall in the world in regional terms in 2020, with a drop of 7% against -3.3% at the global level, while this year a rebound of 4, 6% is expected for the region, although poverty will increase by 20 million people and the GDP per capita before the pandemic will not recover until 2024.

In contrast, he said the interest rate hike seen so far in the United States so far has not affected the region’s recovery, unlike what is happening with the second wave of the pandemic. in health and socio-economic terms.

It should be remembered that last week Werner said that “There are always at least two stages in any restructuring. One is how the terms of debt contracts are changed, the other is how policies are changed to make the new debt sustainable. And I think it’s in this second stage that we have a lot of uncertainty ”.

At a seminar hosted by the Standard & Poor’s rating agency, he said they were working “to be ready when the government wants to finish it and speed it up.” I think we are in a position to do it, but it is true that the negotiations have taken longer than perhaps thought … to be ready in the first half of this year ”.

Europe Tour

In this context, the Minister Martin guzman met today in Madrid the head of cabinet of the Spanish government, Ivan Redondo, and with her counterpart Economic Affairs and Digital Transformation, and Second Vice-President of the Spanish Government, Nadia Calvin.

In the morning, the head of the Palacio de Hacienda held a meeting of over an hour with Redondo, during which they discussed international negotiations in Argentina, bilateral relations between the two nations, the political and social situation. in Latin America and Europe. . and the issues that affect vaccine production and distribution around the world. They also agreed to continue their joint efforts to improve the global financial architecture.

“Thank you to the Spanish chief of staff, Ivan Redondo for supports. From our places in Latin America and Europe, working together and with the contribution of the new political generation, we will be able to evolve towards a world with more opportunities, fair and sustainable ”, declared Guzmán at the end of the meeting. .

Guzmán later met his Spanish counterpart. Nadia calvin for more than an hour, during which they reviewed the issues of the bilateral common agenda in relation to the G20 and the negotiation processes that Argentina is leading with the IMF and the situation with the Paris Club .

At the end of the meeting, the minister stressed that “the construction of a consensus among the shareholders of the IMF on the value of the fundamentals of the program that we are designing from Argentina is necessary to reach an agreement”. “With the Second Vice-President and Minister of the Economy, Nadia Calviño, we are moving in this direction,” he added.

Guzmán will end his European tour tomorrow in Paris, where he will meet his French finance counterpart, Bruno the Mayor, and with the Director General of the Treasury and President of the Paris Club, Emmanuel Moulin, “With whom he will talk about the renegotiation of Argentina’s debt,” said the Palacio de Hacienda.

During his visit to France, Guzmán will also participate in a meeting with representatives of six companies of this origin at the Embassy of Argentina, where he will present on the pillars of the revival of the economy of the country, as is is produced yesterday in Rome.

<< The visit of the head of the Palais des Finances in France takes place as part of his tour on the European continent, where he has held and will develop meetings with the Ministers of Economy and Finance of Germany, Italy , Spain and France, to discuss the renegotiation of the Argentine program with the International Monetary Fund (IMF) and debt with the Paris Club, among other points of common interest, ”he concluded. In the French capital, he will be asked to reach an agreement with the IMF to renegotiate the liabilities with the Club, which next month has a maturity of $ 2.4 billion.

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