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IMF head Christine Lagarde emphasized her support for the adjustment program and reforms initiated by the government to allow credit up to $ 50,000 million over three years. "I have no reason to doubt that they will achieve tax objectives," said the boss of the agency, citing the reduction in public spending to be made by the Treasury. In a brief press conference at G-20 central bankers and finance ministers, Lagarde said "the goal of inflation must be achieved". Consulted on the acceleration of price increases in June that recorded an increase of 3.7%, acknowledged that "a high point has been reached and there have been consultations". The head of the Fund explained that the first mission of the agency scheduled for September would meet "civil society, trade unions and representatives of the opposition". Lagarde was not the only one to renew his vote of confidence in the Macri government. US Treasury Secretary Steven Mnuchin also offered his blessing. "We have lent our support to the IMF and we think the loan is more than enough for Argentina," he said.
"My team and I wanted to hear first-hand how they perceived the economic situation," said Lagarde. The trip was scheduled as part of the preparatory meetings for the G20 summit in November, but the government took advantage of its visit to try to remove the remaining doubts in the markets as to the ability of the Argentine authorities to comply with the agreed program. Disbursements of the reserve credit are conditional on the introduction of a tax adjustment equivalent to 3.7 points of GDP or $ 19.300 million. At the current exchange rate, the sum exceeds 500 billion pesos. "The company we have in operation works unequivocally and we are delighted and happy to help the authorities," said the French lawyer with Minister Nicolás Dujovne. The government must reduce public works expenditures, reduce transfers to the provinces, continue the removal of subsidies, adjust the workforce of civil servants, limit wage increases and reform the social security system. The press conference was held in a room of the Exhibition Center and Congress of Buenos Aires, surrounded by a major security operation. "The IMF always meets with civil society, trade unions and opposition representatives because we need to understand the overall context of the program, these meetings are held within the framework of the Fund's missions. Is not a mission, "explained Lagarde. The technicians in charge of the Fund's first appraisal mission will not only evaluate the achievement of goals and meet with opposition leaders, but will begin to devise a crisis plan for the banking system. During the visit, they will establish the road map to deal with "potential" episodes of bank failures and bankruptcies of entities.
As in March, Lagarde did not spare praise: "In a very short time, they have made tremendous progress. Our program with Argentina takes only a month but there is very good progress on the fiscal and monetary front. The measures taken by British Columbia have restored and managed the situation with less volatility and more transparency, "said the Frenchwoman who tried to speak Spanish but switched to English.
The chief of the organization was received yesterday by President Macri with a dinner in Olivos where, as he said, "they evaluated the fiscal measures and monetary policies" provided under the program. "J & I had the pleasure of meeting President Macri, Minister Dujovne and Central Bank President Luis Caputo. These meetings allowed us to discuss the recent economic developments of the world and Argentina and to take stock of the economic reform plans of the authorities. "Optimistic with the results of the adjustment of public spending, estimated that" the economy will recover in early 2019 and reduce inflation. "Lagarde was accompanied by David Lipton, deputy director general the IMF and a strong man in the power structure.The Director of the Department of the Western Hemisphere, Alejandro Werner, and Roberto Caldarelli, Head of Mission for Argentina, were also present.
Despite the winks, the fund has doubts.After its failure to the Greek crisis, the body has changed its criteria for granting exceptional credits, as requested by Argentina.Now, they evaluate "The political and institutional capacity to effect adjustment." The staff report exposes the doubts it raises among the technicians of the organization: "There is a concern about the capacity of the government to support measures that should to be approved by the Congress, "says the internal report on Argentina forwarded to the board of directors. before enabling the confirmation agreement. "Building social consensus around key elements will be essential and challenging, especially in light of the history of IMF lending to Argentina," says the recently released document last week. The technicians acknowledge "a commitment by the high level authorities to join the Fund," but warn "that there are already significant criticisms of the IMF's participation, which will be a challenge at the very least. along the agreement ".
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