Statement by IMF Staff Mission to Argentina
IMF News, November 26, 2018
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Bibliographic details
- Authors: Arrangement. Completion
- Published: November 26, 2018
Mission context and timing
- Mission led by Mr. Roberto Cardarelli visited Argentina during November 9–16, 2018 to conduct discussions on the Second Review of Argentina’s IMF-supported program under the Stand-By Arrangement (SBA).
- End-of-mission statement dated November 26, 2018.
- Completion of the second review is subject to approval of the IMF’s Executive Board.
Financial envelope and program status
- Staff-level agreement reached on the second review of the economic program supported by the Stand-By Arrangement.
- Completion of the review would make available SDR 5.5 billion (about US$7.6 billion).
Macroeconomic policy assessment and recommendations
- Fiscal policy
- Recent data suggest that achieving the 2018 fiscal target is well within reach.
- Passage of the 2019 budget demonstrates the authorities’ commitment to addressing a key vulnerability.
- Eliminating the primary fiscal deficit is identified as a necessary step to reduce government financing needs and put the debt-to-GDP ratio on a downward path.
- Maintaining social spending identified in the program, and strengthening the social safety net, is essential to shield the poor and vulnerable amid weakening economic activity in the second half of 2018 and still elevated inflation.
- The decision to safeguard social assistance spending in the 2019 budget is welcomed.
- Monetary and exchange rate policy
- The new monetary policy framework put in place by Banco Central de la Republica Argentina (BCRA) in October has been effective in stabilizing financial markets after the extreme volatility experienced in August and September.
- Steadfast implementation of the monetary policy framework and clear communication by the BCRA will continue to be essential to guide market expectations.
- The authorities’ commitment to a market determined exchange rate will strengthen the credibility of the framework and enhance resilience to external shocks.
- The framework gives the BCRA the option to begin a gradual process of FX reserve accumulation if the peso were to fall below the pre-announced non-intervention zone.
- Given their unsterilized nature, a proper calibration of such FX purchases will ensure that the monetary policy stance remains conducive to a rapid reduction of inflation and inflation expectations.
Growth, employment, and social impact
- Strong implementation of the government’s plan is deemed essential to pave the way for a rebound of economic activity in 2019 and to support job creation, reduce poverty, and improve the living standards of all Argentines.
- The mission emphasizes protecting social spending and strengthening the social safety net to shield the poor and vulnerable.
Engagement and acknowledgements
- The mission met with the Minister of the Economy Nicolas Dujovne, the Governor of the Central Bank Guido Sandleris, as well as other government officials and members of the private sector and civil society.
- The mission team thanked the authorities and interlocutors for their warm welcome, constructive dialogue, and cooperative spirit.
Statement by IMF Staff Mission to Argentina, November 26, 2018