Argentina Now in Deep Recession, Needs Credible Roadmap, Says IMF Chief

RIO DE JANEIRO, BRAZIL – “Argentina faces very dramatic challenges, the country is in a deep recession and social conditions are worsening”, was the response of IMF chief Kristalina Georgieva when asked about the difficult challenges faced by Argentina and if the current government has the political will and consensus to move forward with a plan to restore confidence.

During a press conference on Wednesday in Washington, Ms. Georgieva said that economic imbalances are growing and “the divorce between the official exchange rate and the shadow [“blue”]exchange rate is expanding.”

“The country is at a point when, as the IMF mission to Argentina has concluded, the top priority ought to be to put in place a credible and comprehensive economic agenda that balances supporting the economy and people in this very difficult time with also making sure that we have macroeconomic stability in sight.”

Ms. Georgieva insisted that the most important task for Argentina is, indeed, to give that roadmap showing the direction to travel, and how we will know we are reaching our destination.

Finally “we are there to support Argentina and the IMF mission will return in November,” and “we want to be a partner of Argentina. We do count on a political determination to get the country out of what has been historically a boom-bust cycle.”

The IMF mission that recently visited Buenos Aires, (October 6/11) at the conclusion of the staff visit issued the following statement:

“Argentina is facing complex economic and social difficulties, in the context of an unprecedented health crisis. The deep recession has led to an increase in already-high poverty and unemployment levels, the effects of which are being exacerbated by significant pressures in the FX market. These are exceptionally difficult challenges with no easy solutions. A comprehensive set of policies could underpin a restoration of confidence but will need to be very carefully calibrated to promote the recovery and secure macro-economic stability.

“Staff gained a deeper understanding of the authorities’ policy plans to stabilize the economy and put it on a more sustainable and inclusive growth path. Staff welcomed the authorities’ commitment to policies to secure a growth-friendly fiscal consolidation while also protecting the most vulnerable, enabling a gradual reduction in inflation, and boosting job creation, investment and exports.

“The IMF team was led by Julie Kozack Deputy Director of the Western Hemisphere Department and Luis Cubeddu Mission chief for Argentina, and plans to continue to engage closely with the authorities, to initiate discussions on a new IMF-supported program.”

Source: MercoPress