BUENOS AIRES.- The International Monetary Fund said that the policies implemented in Argentina by the government of President Javier Milei have exceeded expectations and that is why an agreement has been reached with the authorities of the South American nation to continue with measures that lead to economic recovery.
The IMF statement comes after a visit by the multilateral organization’s technical staff to review an existing agreement. Argentina is going through a sharp slowdown in its economy and could end the year with a recession of around 2.8%, added to one of the highest inflations in the world of 211.4% in 2023.
In recent weeks, street protests and social unrest among the population have increased, whose purchasing power has been severely hit by Milei’s economic measures.
The IMF said it expects the board to review the agreement in the coming weeks, but did not offer details of dates or amounts of money. Nor did he report what measures were agreed upon with the government, which since it took office in December began to implement a state adjustment and deregulation plan.
“IMF technical staff and Argentine authorities reached an understanding on policies to continue strengthening the disinflation process, rebuild international reserves, support the recovery, and keep the program firmly on track,” the IMF said in a press release in which assured that the results were “better than expected” and all the performance criteria for the first quarter of the year were exceeded.
The agreement announced on Monday, however, must still be approved by the Fund’s executive board and only then would Argentina have access to money disbursements.
In January, the IMF and the Milei government announced that they were reviving a multimillion-dollar refinancing program for a loan granted in 2018 that had been suspended due to non-compliance by the previous government.
Along with Haiti, the Argentine economy was one of the hardest hit in the region in 2023, with a 2.5% contraction of its Gross Domestic Product. More than 40% of the 46 million Argentines are in poverty.
Shortly after assuming power on December 10, 2023, Milei launched a state adjustment and deregulation plan with strong cuts in public spending to reduce the fiscal deficit and thousands of layoffs in the public administration. He also reduced subsidies to public transportation and the energy sector, thus impacting the population with increases in train and bus tickets and gas and electricity rates.
The administration has also applied policies of price deregulation, tax increases and a devaluation of more than 50%, which have hit purchasing power.
The IMF said that despite having inherited a complex economic and social situation, the Milei government’s plan “has made it possible to advance faster than expected in the reestablishment of macroeconomic stability.”
Among the “most notable results” he highlighted the first quarterly fiscal surplus in 16 years, the rapid fall in inflation, the change in the trend of international reserves and the reduction of sovereign risk.
He also said that authorities “have made significant efforts” to expand social assistance to vulnerable mothers and children and to protect the purchasing power of retirees.
Among the goals set with the IMF when relaunching the program at the beginning of this year, the government committed to having reserves equivalent to 10 billion dollars by the end of 2024 and a fiscal surplus of at least 2% of GDP.
Source: AP
