Thumbs up from the IMF to Argentina’s policy changes

Thumbs up from the IMF to Argentina’s policy changes

After Argentina’s Economy Minister Luis Toto Caputo announced Tuesday in Buenos Aires a series of measures to tackle inflation, the Communications Director of the International Monetary Fund (IMF) Julie Kozack said in a statement that “these strong initial actions aim to significantly improve public finances in a way that protects the most vulnerable in society and to strengthen the exchange rate regime.”

“Its resolute implementation will contribute to stabilizing the economy and lay the foundations for a more sustainable and private sector-led growth,” Kozack added. She also stressed that “IMF staff and the new Argentine authorities will work expeditiously in the period ahead.”

The emergency package included, in addition to a devaluation, not renewing labor contracts of less than one year, suspending official advertising in the media, reducing the number of ministries and government secretariats, cutting to a minimum the transfers from the national State to the provinces and not tendering new public works.

“After the serious setbacks in economic policy in recent months, this new package of measures is a good basis for continuing discussions aimed at bringing the current Fund-supported program back on track,” Kozack also underlined as Milei’s Argentina needs to renegotiate a debt of some US$46 billion with the IMF since the previous agreement dating back to 2022 failed to meet the fiscal deficit targets.

Meanwhile, IMF Managing Director Kristalina Georgieva said, “I welcome the decisive steps announced today by President Javier Milei and his economic team to address Argentina’s important economic challenges” and spoke of “an important step toward restoring stability and rebuilding the country’s economic potential.”