RIO DE JANEIRO, BRAZIL – “Argentina faces significant challenges since inflation is very high” and “it is not yet obvious” how this indicator will evolve. Therefore, “much remains to be done in terms of macroeconomic stabilization,” said Gopinath at the press conference to present the “Global Economic Prospects” report.
Argentina recorded cumulative inflation of 36.1% in 2020, achieving a deceleration from 53.8% in 2019, in a context of economic recession that began in 2018 and deepened by the covid-19 pandemic.
Commenting on rising prices in Argentina, Gopinath said the government “has been working hard on it.” “We are in close collaboration with Argentina to help forge a stronger socioeconomic framework,” she added, referring to the country’s financial stability program agreed with the IMF.
The multilateral body approved in mid-2018 to grant a loan to Argentina, then governed by conservative Mauricio Macri (2015-2019) for about US$56.3 billion, after a sharp capital flight accelerated the devaluation of the peso and caused strong imbalances in the national economy.
With the victory of leftist Alberto Fernández in the October 2019 elections, the new government declined to accept more funds than the US$44 billion already received up to that moment. It announced talks with the IMF to reach an agreement to delay the repayment of the loan.
According to the agreement, the South American country must begin to cancel the capital of the credits received as from next September (when payment of US$1.835 billion is due) and until 2024. Still, the bulk of the payments is 2022 (US$17.346 billion) and 2023 (US$18.395 billion).
To the capital payments of 44,128 million between 2021 and 2024, interest maturities in that period for US$3.8 billion should be added.
The Fernández government has repeatedly warned Argentina that it does not have the capacity to pay the IMF within the established terms, so it intends to negotiate a new extended facilities agreement with the organization, but without heavy conditions that would imply a new adjustment for the Argentine economy.