Argentina’s runaway inflation has not only prompted criticisms from the opposition and even some government sectors at home – there’s also been harsh commentary from the International Monetary Fund.
"Inflation is paralysing the economy in Argentina," concluded Ceyla Pazarbasioglu, the IMF’s strategic director and a Turkish economist entrusted with evaluating the consistency of the local data in the light of the IMF agreement.
"Inflation is toughest on the most vulnerable" and it is imperative "to tame it," Pazarbasioglu said in a televisión interview, explaining that the decision to raise interest rates to 47 percent "is part of the agreement which Argentina concluded with the IMF."
In that context, she added: "We are seeing shock after shock in the world economy including financial crisis, coronavirus and war. Many countries have an unsustainable debt" requiring careful work on the part of the IMF, governments and the private sector.
Via Twitter, the economist called on "the international community to urgently support vulnerable countries via coordinated actions ranging from emergency food supplies to financial support, increased agricultural production and opening up trade."
The comments came as opposition leaders lined up to hammer the government in the wake of INDEC’s revelation that inflation reached 6.7 percent in March.
Describing inflation as “a hidden tax that eats the income of those who work,” Buenos Aires City Mayor Horacio Rodríguez Larreta called for “a comprehensive economic plan” to tackle price hikes.
"The national government has an obligation to resolve this issue urgently, but the solution will never come from boasting about not having an economic plan, but exactly the opposite. There are no magic solutions, it is a lie that there is a secret formula to unlock this problem. The only thing that solves inflation is a consistent and serious comprehensive economic plan. The government has not yet presented it, we Argentines are waiting for it," said the Juntos por el Cambio leader.
PRO deputy María Eugenia Vidal complained that the government was repeating unsuccessful policies, while Radical deputy Martín Tetaz blamed the government’s money-printing for the rate.
Fellow opposition lawmaker Waldo Wolff said the ruling coalition was “breaking social contracts,” while calling on them to “take charge.”
New IMF fund
Meanwhile the IMF has approved the creation of a new Resilience and Sustainability Trust (RST), destined to boost the economies of poor and middle-income countries as from next month in the framework of “climate change and pandemics,” from which Argentina stands to pick up US$1.3 billion in special drawing rights (SDRs).
“The RST will broaden the impact of the US$650 billion assigned last year to channel funds from our economically stronger members towards countries where the needs are greater. The aspiration is to build up a trust of at least US$45 billion as an aid to vulnerable countries facing longer-term challenges posing risks to their economies and peoples,” commented IMF Managing Director Kristalina Georgieva.
Last August Argentina received US$4.334 billion in special drawing rights which were deposited as reserves in the Central Bank and used to pay part of the debt to the IMF.
Sums from the new trust can be returned over a period of 20 years, “thus helping to generate resilience from the long-term risks for the stability of the balance of payments,” indicated Georgieva in an official communiqué.