Argentina: Staff Report for 2022 Article IV Consultation and request for an Extended Arrangement under the Extended Fund-Facility-Press Release; Staff Report; and Staff Supplements
IMF Staff Country Reports, March 25, 2022
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- Argentina: Staff Report for 2022 Article IV Consultation and request for an Extended Arrangement under the Extended Fund-Facility-Press Release; Staff Report; and Staff Supplements
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Bibliographic details
- Published: March 25, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400205453.002
Background and focus
- Consultation set against a decade of declining per-capita income and high inflation.
- Focus on policies to begin to tackle Argentina’s underlying impediments to sustained growth and low and stable inflation.
- Emphasis on avoiding boom-bust dynamics by promoting net exports and mobilizing domestic saving to finance investment.
Key findings and diagnostics
- High degree of financial dollarization; reversing dollarization will take time and require a durable commitment to tackle fiscal dominance and strengthen debt sustainability.
- Budget rigidities reduce Argentina’s resilience to shocks.
- Public spending composition needs reorientation towards investment and innovation to support productivity and reduce intergenerational inequities.
- Sustained political and social consensus is necessary for policy predictability and to balance financing of a large social welfare system with encouragement of private investment and formal employment.
Policy recommendations and priorities
- Promote net exports to avoid boom-bust dynamics.
- Mobilize domestic saving to finance much-needed investment.
- Tackle fiscal dominance to reduce financial dollarization and strengthen debt sustainability.
- Address budget rigidities to improve resilience to shocks.
- Reorient public spending toward investment and innovation to support productivity and reduce intergenerational inequities.
- Build sustained political and social consensus for policy predictability and to reconcile social financing with private investment and formal employment objectives.
Risks and implementation considerations
- Reversing financial dollarization is a long-term process that depends on durable policy commitments.
- Policy implementation risk implied by the need for fiscal consolidation and structural reforms while maintaining social protection.
- Need to manage trade-offs between financing social welfare and promoting private-sector-led growth.
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