The International Monetary Fund warned that Argentina faces a steep path and needs to move forward to get out of the crisis. economic crisis that is going through, protecting the most vulnerable sectors that mostly bear the weight of the adjustments implemented by the libertarian government of President Javier Milei.
The statements by Julie Kozack, director of communications at the IMF, were made after repeated praise that the multilateral organization has expressed for Milei’s policies since he assumed his duties last December.
They also arrive at a time when the South American nation faces a spate of street protests and strikes given the impact of economic reforms on a large part of the lower-income sectors and the increasingly impoverished middle class.
“The path ahead for Argentina remains challenging,” Kozack said at a press conference Thursday from the IMF headquarters in Washington. “Building on these early achievements means that policies will have to evolve,” he said, without identifying those achievements.
The IMF is closely monitoring “Argentina’s delicate social situation” and has emphasized the “need to increase social assistance to support the poor” and ensure that the burden of adjustment does not fall disproportionately on working families, the agency said. spokesperson for the organization.
Almost immediately after assuming power on December 10, 2023, Milei implemented a state adjustment and deregulation plan with strong cuts in public spending to reduce the fiscal deficit, including thousands of layoffs in the public administration. It also reduced subsidies to public transportation and the energy sector, thus impacting the population with increases in train and bus tickets and gas and electricity rates.
The administration has also implemented price deregulation, tax increases and a devaluation of more than 50%, which have hit purchasing power.
Argentina is going through a strong deceleration of its economy and could end 2024 with a contraction of around 2.8%, according to World Bank estimates, added to one of the highest inflations in the world, at 289%.
Following Milei’s adjustment measures, the government recently announced that went from a fiscal deficit to a fiscal surplus of 5 points. He also assured that he has achieved a trade surplus, a current account surplus and an inflation of 8.8% in April, the first single digit in eight months.
Despite growing social discontent, the president has assured that he will continue with adjustment policies.
Kozack said it is necessary to improve the quality of fiscal consolidation to ensure its durability and equity, protecting the most vulnerable. He also mentioned that monetary and fiscal policy must evolve to anchor inflation and safeguard further progress and said that it is a “high priority” to carry out reforms that eliminate barriers and promote formal employment and private investment, in addition to expanding political support for reforms. macroeconomics.
In Argentina, one of the most important economies in Latin America along with Brazil and Mexico, more than 55% of the population of 47 million inhabitants lives in poverty, according to new studies from the Argentine Catholic University. The latest official data released in March indicated that poverty reached 41.7% in the second half of 2023.
In the first quarter of 2024, the economy fell 5.3%, according to government information.
In May, the IMF announced that it had reached an agreement with the Argentine authorities, after having revived a multimillion-dollar refinancing program for a loan granted in 2018 that had been suspended due to non-compliance by the previous government.
Once the deal is approved by the Fund’s board, Argentina will have access to about $800 million, Kozack said.
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