Argentina: The IMF celebrates the decrease in inflation but takes note on Government spending

"it is important to continue working pragmatically to build social and political support to help ensure the durability of reforms".

Gabriel Micillo•Thursday, April 4, 2024•2 min read

The spokesperson for the Fund stated that “Argentine authorities are decisively implementing an ambitious stabilization plan,” but called for better construction of social and political support.

The International Monetary Fund (IMF) described the progress of Argentina’s economic program as “impressive” and considers it “very positive” that inflation is decreasing faster than anticipated. However, it also warned about the need to act “pragmatically” in building social and political support for the reforms implemented by the Government and the necessity of carrying out “a consistent and well-communicated exchange and monetary policy to support the sustained accumulation of reserves and disinflation.”

These remarks were made by the spokesperson for the organization, Julie Kozack, in her traditional press conference.

The IMF representative stated that “Argentine authorities are decisively implementing an ambitious stabilization plan to restore macroeconomic stability.”

She noted that this plan focuses on establishing a strong fiscal anchor to eliminate any financing from the Central Bank to the Government, along with policies aimed at reducing inflation, rebuilding reserves, and addressing distortions and other long-term growth impediments.

“The progress so far has been impressive,” stated Kozack, highlighting the fiscal surplus recorded in both January and February, the first time in over a decade.

She provided a favorable assessment, noting that “international reserves are being rebuilt. Inflation is falling more rapidly than anticipated. And market indicators, such as the exchange rate spread and sovereign debt quotations, continue to improve.”

However, the spokesperson emphasized that “the path to stabilization is never easy and requires firm policy implementation.” In this regard, she pointed out that “It will be important to continue improving the quality of fiscal adjustment, while monetary policy will also need to adapt to this transition.”

The IMF praised the recent efforts of authorities to expand social assistance in the program for child support and to protect the real value of pensions.

Kozack stated that “it is important to continue working pragmatically to build social and political support to help ensure the durability and effectiveness of the reforms.”

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ABOUT THE AUTHOR See More

Gabriel Micillo

Gabriel is a certified public accountant graduated from UNNE (National University of the Northeast, Argentina) and a software developer, currently pursuing a Master's degree in Finance and Economics. With nearly 8 years of experience working for accounting firms and brokerage firms. Concurrently, he has produced economic and financial reports on the current state of regional economies for the clients of the establishments where he has worked. Additionally, he assisted colleagues like Ignacio Teson in the drafting and editing of articles on similar topics in English language.