Tuesday, June 18, 2024

ECONOMY | 26-07-2023 14:46

IMF seeks to stop Argentina’s 116% inflation from getting much worse

The International Monetary Fund works with Argentina to tackle soaring inflation and revive economic stability

The International Monetary Fund is working with Argentina to help stop its 116 percent inflation rate getting significantly worse, the Fund’s top economist said. 

“Inflation numbers at that level is always a very, very worrisome sign,” Chief Economist Pierre-Olivier Gourinchas said Tuesday, in an interview with Bloomberg TV. “What we are doing is, working with the authorities and trying to make sure that we have in place policies that would prevent inflation from escalating from this already very high level.”

Argentine officials and IMF staff are finalising terms to the latest version for the country’s US$44-billion programme after months of negotiations.

On Tuesday, the IMF revised its 2023 inflation forecast for Argentina to 120 percent from 98.6 percent. It also forecast a 2.5 percent economic contraction this year, from a previous forecast of 0.2 percent growth. 

Argentina’s problems have been aggravated by the severe drought that has hit farms in one of the world’s biggest agricultural exporters, Gourinchas said. The devastation brought on by the drought is one of the reasons Argentina and the IMF have had to overhaul their agreement.

On Sunday, the Fund announced that its staff and Argentine officials had completed the core aspects of the technical work of the fifth review. Gourinchas didn’t provide any specifics on the negotiations, which have been ongoing for months.

The talks are intended to “try to put the country on a firmer path to growth and monetary stability,” he said. 

Argentina Economy Ministry said Sunday that they expect to reach a staff-level agreement sometime this week. Gourinchas said the question of whether Argentina could use IMF money to intervene in the FX market was one of the elements “under consideration right now.”


by Manuela Tobias & Hannah Pedone, Bloomberg


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