The Monetary Fund released a statement announcing the progress in the negotiations with the country’s delegates and what is missing for an agreement
The International Monetary Fund (IMF) issued a statement this Friday in which it gives an account of the latest conversations it had with the representatives of Argentina and details the requirements that were raised to the country in economic matters to allow the realization of a new agreement.
“There was progress in technical work between the Argentine delegation and the IMF team as part of their discussions to reach an IMF-supported program. The teams analyzed recent economic developments and discussed growth, inflation, and balance of payments prospects. The teams recognized the stronger-than-expected recovery in economic activity and investment this year, and the importance of a policy framework to sustain the economic recovery and improvements in social and labor conditions in a lasting manner “, notes the statement.
A team from the International Monetary Fund (IMF), led by Julie Kozack, deputy director of the Western Hemisphere Department, and Luis Cubeddu, head of mission for Argentina, met from December 5 to 10 in Washington, DC with a technical delegation from the Ministry of Economy and Central Bank of the Republic of Argentina.
The IMF states that “there was a general understanding of the need to gradually and sustainably improve public finances, while giving rise to much-needed investments in infrastructure, technology and targeted social spending.”
Conditions for the agreement with the IMF
In its message, the Fund states: “Addressing persistent and high inflation requires a multi-pronged approach that involves a reduction of monetary financing of fiscal deficit, an adequate monetary policy with positive real interest rates and a coordination of prices and wages. This must also be supported by policies to accumulate international reserves, including by promoting foreign direct investment and exports, which grew very solidly this year, especially in value-added sectors. Progress was also made in measures to develop the domestic capital market, strengthen the effectiveness of public spending, and improve monetary policy operations. The teams agreed that broad support, both domestically in Argentina and from the international community, would also be critical to the overall success of the economic program.
“While further discussions will be necessary, the IMF team and the Argentine authorities remain fully committed to their joint work on a framework and policies for an IMF-supported program,” the statement concluded.
Press the IMF as interpreted by the Government
As soon as the text of the Fund was known, the Executive came out to highlight the positive points contained in the message. In other words, the glass is half full on the progress of the negotiation of a new agreement.
For the Government, there are four points that should be highlighted and that generate optimism:
one. There were technical advances: it indicates that there were greater understandings on the way to reaching a new agreement that allows to refinance the debt maturities that the JxC government took with the 2018 program.
two. The IMF calls for broad national and international support for the program.
3. The IMF once again recognizes that the inflation problem is multi-causal and tackling it requires a comprehensive macroeconomic approach.
Four. The IMF recognizes that the recovery of production and investment in Argentina are stronger than expected.
Official sources highlight that “the IMF recognizes that production recovery and the investment in Argentina they are stronger than expected. This recognition is important for defining the starting point of a possible new program with the IMF “.
On the other hand, they emphasize that there is agreement with the Government’s vision of the importance of sustaining this recovery. “This point reinforces Minister Guzmán’s line on the need for the agreed program to include macroeconomic policies that give him continuity to recovery strong that Argentina is living, “they said.
On the other hand, the Government interprets that an abrupt adjustment will not be imposed. “There is talk that the sustainable improvement of public finances is gradual. The minister’s vision is that a program with fiscal adjustment would slow down the recovery“, they clarify
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