02/25/2024 – 11:40
The International Monetary Fund (IMF) has recommended that President Javier Milei protect Argentina's poorest social sectors as he advances his ultra-liberal economic reforms and seeks to reduce the fiscal deficit to zero.
“The concrete measures adopted to comply with the fiscal anchor must be calibrated to ensure that social assistance continues to be provided and that the burden does not fall entirely on the poorest groups”, declared IMF Deputy Director, Gita Gopinath, in an interview with newspaper La Nación published this Sunday (25).
Argentina maintains a 44 billion dollar (219 billion reais) credit program with the IMF and the official visited the country on Thursday and Friday to personally assess its progress and meet with Milei and members of his government, but also with economists, trade unionists and representatives of social organizations who demand more state aid.
During the two and a half months of its administration, the government faced a 50% devaluation of the currency, the complete liberalization of prices, deregulations and drastic cuts to achieve zero fiscal deficit this year, as the main remedy to contain inflation of 254.2% and reverse poverty of more than 50%.
Gopinath considered “it is important to ensure that the real value of pensions and social assistance is maintained. That pensions and social assistance keep pace with inflation.”
She opined that “the economy inherited by this government was on the brink of crisis and required bold and decisive action to pull it back from the precipice” and that some social relief measures had already been adopted, “but more will be needed to ensure that the reduction of the fiscal deficit does not fall on the vulnerable segments of society”.
“We anticipate that inflation could fall to single digits by the middle of this year,” said the credit body’s deputy director, “but I believe it will take at least a year to reduce inflation to low levels and then maintain it at those levels until 2025 will also require efforts”, she pondered.
For the IMF, “it will also be very important to invest in human capital. This is a critical aspect. Child poverty rates of over 55% are extremely worrying. It is the future of the country. It is important to ensure that this percentage decreases significantly and to be able to invest more in education.”
Regarding Milei's plans to dollarize the economy to complete his ultra-liberal economic reforms, Gopinath insisted that “the decision about what kind of monetary regime a country will have is a sovereign decision.”
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