Sunday, May 26, 2024

WORLD | 02-05-2024 17:02

Argentina given roadmap for OECD ascension

Foreign Minister Diana Mondino receives document laying out plan that will see nation win membership of Organisation for Economic Cooperation and Development.

Argentina has been given the roadmap it must implement if it is to finally become a member of the Organisation for Economic Co-operation and Development, the institution that brings together the biggest democratic economies in the world.

Foreign Minister Diana Mondino received the formal roadmap from OECD Secretary-General Australian Mathias Cormann, during a ceremony held at the organisation’s headquarters in Paris.

“The process has accelerated very significantly in the last four months [since President Javier Milei took office]. Now the work begins in earnest,” Mondino told the press afterwards, specifying that Argentina will establish “its own policies” based on the advice.

Argentina formally applied to join the OECD in 2016 under former president Mauricio Macri. Six years later – and following the ejection of a Peronist government from office – the OECD is willing to start the process. 

A number of other nations are also in the process of ascension, including Brazil, Peru, Bulgaria, Croatia and Romania. Unlike those nations, Argentina was not given a road map in June 2022, despite “positive conversations” with former president Alberto Fernández, said Cormann.

Mondino has been given a document outlining the methods and conditions for membership. The OECD will examine such areas as trade, investment, anti-corruption policies and climate change. 

“It is about working on all OECD standards and best practices to help Argentina improve its economic growth and the lives of its people,” said Cormann, who hailed the “historic moment.”

The breakthrough in the accession process comes two days after the government won approval in Congress for President Milei’s sweeping ‘omnibus’ bill and accompanying fiscal package, which – if they clear the Senate – would massively deregulate the economy.

Milei’s government won the firm backing of OECD chief economist Clare Lombardelli on Thursday, who offered a presentation of the organisation’s take on Argentina.

“The government is now implementing a very restrictive fiscal and monetary policy to control inflation. It is the right thing to do, but it will take time to bear fruit,” said Lombardelli.

For the British economist, reducing inflation “is the priority to help people who suffered really hard times,” but she acknowledged that this “will, of course, be a painful process.”

According to the report, Argentina’s economy will contract by 3.3 percent this year – a full point worse than previously projected. The OECD predicts growth of 2.7 percent in 2025.

Regarding inflation, the OECD projects an annual rate of 208.1 percent in 2024, falling to 71.2 percent in 2025.

“High inflation, a considerable but necessary fiscal adjustment and political uncertainty will weigh on private consumption and investment for most of 2024,” the report reads.

The OECD called for continued “ fiscal consolidation” and estimated that “planned reforms to ease regulatory burdens, improve the business environment and open the economy to international trade” will help “curb poverty.”

Mondino said Argentina is keen to eliminate the “scourge of inflation” and would establish “clear rules” to foster “growth” and “development.”

Four Latin American countries – Chile, Costa Rica, Colombia and Mexico – are already part of the OECD, which was founded in 1961 and whose 38 members account for around 80 percent of global trade and investment.



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