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economy ECONOMIC TURBULENCE

IMF: Budget proposal is key element of new crisis loan deal talks

The IMF says "important progress" had been made on the economic reforms needed to strengthen the programme supported by the Washington-based crisis lender.

Thursday 20 September, 2018
International Monetary Fund (IMF) Communications Director Gerry Rice.
International Monetary Fund (IMF) Communications Director Gerry Rice. Foto:AFP

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The budget proposal submitted to Congress by President Mauricio Macri's administration this week is a key element in the reforms needed for a new loan package for the crisis-hit country, an International Monetary Fund (IMF) spokesman said Thursday, citing the "important progress" being made between the two parties.

However, there is still no timeframe for finalising the news terms of the aid package, IMF spokesman Gerry Rice told reporters, repeating that the goal is to reach an agreement "in short order" to send to the IMF board. "I am trying to impress a sense of urgency around this," he said.

The IMF on Monday said "important progress" had been made on the economic reforms needed to strengthen the programme supported by the Washington-based crisis lender.

Rice said the draft budget submitted to Congress on Monday was "a fundamental part of the authorities' plan to strengthen their economic policies and to boost confidence." 

"What I can tell you is that important progress is being made toward strengthening Argentina’s economic policy plans supported by the IMF stand-by arrangement," Rice told a regular IMF news briefing. "We are working very hard to conclude these staff level talks in short order."

And he noted that the budget proposal "protects spending on social assistance and health," including expansion of healthcare programmes for children.

"We thought it very important that the proposed budget protects spending on social assistance and health," Rice said. "We believe this is key in light of the economic challenges facing the country."

The country's primary budget deficit has dropped from 6 percent in 2015 to 3.9 percent last year and is expected to reach 2.7 this year, according to the government.

Economy Minister Nicolás Dujovne said fiscal balance is critical "to maintain economic order."

The IMF and Buenos Aires agreed in June on a three-year, US$50-billion rescue lending programme but the Macri administration has since asked for a more rapid disbursement, although Dujovne has denied the government is seeking additional funds.

Buenos Aires has received a US$15-billion disbursement but any changes in the programme require the approval of the IMF board.

The objective remains "to reach rapid conclusion" to the negotiations and present a new plan to the IMF board as soon as possible, Rice said, but "I don't have a specific timeline."

President Mauricio Macri is under increasing pressure as the peso has plunged – despite intervention from the Central Bank – and the recession worsens.

And he is facing growing opposition from the public for seeking help from the IMF, which has a bitter history in the country and is blamed for past economic woes.

- TIMES/AFP/AP

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