IMF sees Argentina making steady progress
Washington, June 25
The International Monetary Fund on Thursday said Argentina has continued to make "important progress" in restoring macroeconomic stability, with growth strengthening, inflation declining, and financing conditions improving, while expressing confidence that the country will continue to meet its obligations to the Fund.
Speaking at a regular IMF press briefing, Julie Kozack, Director of the IMF's Communications Department, said Argentina's economic reforms were beginning to produce tangible results.
"I just want to continue to recognise that Argentina is continuing to make important progress in restoring macroeconomic stability, in strengthening the country's economic resilience, and creating a more open and efficient economy," Kozack said.
"Growth has continued, inflation is falling, international reserves are being rebuilt, and financing conditions have continued to improve for Argentina."
Responding to questions about Argentina's financing needs and access to international markets, Kozack said market conditions had improved considerably but stressed that decisions on future borrowing rested with the government.
"What we've seen is that they have improved considerably. Sovereign spreads have narrowed significantly in Argentina. They're now below 450 basis points. Market sentiment for Argentina has become more favourable," she said.
Kozack said the improvement reflected upgrades by two credit rating agencies as well as the authorities' policy efforts.
"But I also want to say that decisions regarding the timing and the terms of market access are ultimately decisions to be made by the authorities," she said.
The IMF also welcomed support from other international financial institutions, saying cooperation with the World Bank and the Inter-American Development Bank could strengthen investor confidence.
"We recognise the important catalytic role that international financial institutions and multilateral development banks can play in supporting countries' financing strategies and their reform agendas," Kozack said.
She said such support could "reinforce confidence", "improve financing conditions", strengthen external resilience and facilitate "a gradual and sustainable return to market financing".
On labour market reforms, Kozack said one of the IMF-supported programme's objectives was to encourage greater formal employment, although the impact of recent reforms would take time to become visible.
"Formalisation depends on a number of different factors. It includes not only macroeconomic outcomes, but also the tax and the regulatory structure, which include rigidities in the labour market, and no single indicator can really capture the extent of formalisation," she said.
She added that the recently enacted labour reforms were still new and "the effects of these kinds of reforms take time to emerge".
Asked about concerns over Argentina's ability to repay IMF loans, Kozack dismissed suggestions that the Fund had doubts over future repayments.
"I would just point out that Argentina has made all of its payments to the Fund, and we are confident that they will continue to do so. We don't have any concerns there," she said.
Argentina has been implementing sweeping economic reforms aimed at reducing inflation, restoring fiscal discipline and rebuilding investor confidence. The country remains the IMF's largest borrower under its existing financing arrangements and continues to work closely with the Fund as it pursues macroeconomic stabilisation.
— IANS
Reader Comments
IMF always praises countries when they follow their prescriptions, but the real question is - at what cost to the common people? Argentina has seen massive protests against austerity. India should learn from this: reforms must be balanced with social safety nets. Just look at our own experience with demonetisation and GST rollout.
Interesting to see sovereign spreads below 450 basis points - that's a remarkable turnaround. But I'm cautious about the labour reform part. Formalisation is difficult even for India with our vast informal sector. Argentina's unemployment is still high at over 10%. Let's see if this translates to real jobs or just statistical improvements 📊
Impressive to see Argentina turn things around. The narrowing of sovereign spreads is a strong signal to global markets. However, I'm wary of the IMF's optimism - they've been wrong before about Argentina. Remember 2018? The proof will be in sustained growth, not just quarterly numbers.
As someone who follows emerging markets closely, Argentina's story is quite inspiring. But let's not forget they've defaulted on debt multiple times. The IMF saying "we are confident they will continue to repay" sounds like wishful thinking given their history. India should take note - IMF loans come with strings attached. We've been smart to keep our foreign debt low.
The mention of World Bank and IDB support is key - multilateral coordination can really boost investor confidence. India benefited from similar cooperation during our 1991 crisis. But Argentina's situation is different - their inflation was 200%+ at peak. Even 10% inflation in India feels painful, can't imagine what Argentines
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