IMF declares Argentina is on ‘correct path’

An International Monetary Fund (IMF) official declared Thursday that Argentina is “on the right path” in implementing spending plans agreed with Mauricio Macri’s government that will stabilise the country’s economy, as he ruled out a potential renegotiation of the country’s repayment plan.

The IMF last year loaned Argentina a record US$56 billion in credit in exchange for a strong fiscal adjustment, with a view to recovering investor confidence after a currency crisis saw the collapse of peso and a steep rise in inflation. The country remains in recession.

“We are focused on the current programme,” IMF spokesman Gerry Rice told a press conference. “We believe [Argentina] is on the right path.”

Rice said Argentina had made “important achievements that should not be overlooked,” citing the reduction of “macroeconomic vulnerabilities.”

The IMF official also dismissed rumours Argentina and the IMF would renegotiate its planned repayment schedule.

“The possibility of changing the payment schedule is not being discussed,” he said bluntly.

Rice stressed that the economic policies underlying the programme help address “key” problems in Argentina’s economy, such as the reduction of external and fiscal imbalances. The IMF official said continued compliance with the agreement would “lay the foundations for economic stability and sustainable growth.”

Asked about criticism of the government’s austerity package, Rice said that the IMF has tried to be “flexible and pragmatic in making adjustments to the programme,” an acknowledgement of the difficulties facing much of Argentina’s population.

Inflation is expected to come in at over 40 percent this year by most sectors, after totalling 54.7 percent over the last 12 months.

The IMF expects Argentina’s GDP to shrink by 1.2 percent this year, after 2.5-percent contraction in 2018.