Sunday, May 26, 2024

ECONOMY | 18-04-2024 15:51

Argentina's inflation falling ‘a little faster than expected,’ says Georgieva

Kristalina Georgieva, the head of the International Monetary Fund, says "inflation is coming down faster than expected" in Argentina.

Argentina's inflation "is coming down a little faster than initially expected," International Monetary Fund (IMF) managing director Kristalina Georgieva said Thursday.

The remarks were the latest in a string of IMF praise for President Javier Milei’s government in recent weeks. They arrived hours before Economy Minister Luis Caputo met with Georgieva’s deputy, Gita Gopinath, in Washington for talks on Argentina’s US$44.5-billion credit programme.

The multilateral lender has been vocal in its support for the new government since the libertarian leader’s arrival to office last December.

The IMF still expects inflation to exceed 150 percent this year, though it forecasts a considerable slowing in 2025. 

Despite high year-on-year inflation, price increases moderated for a third consecutive month in Argentina in March, reaching 11 percent, according to data from the INDEC national statistics bureau

Though many citizens are struggling to make ends meet, Georgieva seems satisfied with Milei’s fiscal adjustment.

"Argentina, a country that has long been perceived as a laggard from the point of view of reforms, is now moving very quickly in adjusting fiscal spending, gaining the capacity of private investment," she said during a press conference in Washington this week. 

Nevertheless, both the IMF and the World Bank have warned the Milei government not to leave “the most vulnerable” behind. More than half of the population lives in poverty and social unrest is growing in response to fierce austerity and a wave of public sector lay-offs.

The remarks were delivered prior to Caputo’s meeting with Gopinath, the IMF’s deputy managing director Gita Gopinath for talks. The “wide-ranging conversation,” as an Argentine diplomatic source put it, involved the discussion of Argentina’s economic targets for the first quarter.

The goal of the Argentine delegation, which includes Central Bank Governor Santiago Bausili, is to convince the IMF and the US Treasury to extend its current US$44.5-billion credit programme, so that the country can access fresh dollars to accelerate its exit from capital controls. Milei has previously said that Argentina needs to raise around US$15 billion to facilitate the move.

Initial reports described the 30-minute encounter between Caputo and Gopinath as relaxed and good, but sources played down expectations that the IMF will dish out fresh funds to Argentina to increase Central Bank reserves and speed its exit from currency controls.

IMF spokespersons said that idea was “premature,” while Argentine officials said the issue had been parked for future discussions.

Earlier this week, IMF economists forecast that Argentina’s economy would contract by 2.8 percent this year, before returning to growth in 2025.

As for Latin America in general, Georgieva applauds the fact that countries have put their policies in order, "which have allowed them to reduce inflation faster" than elsewhere.



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