Press Release No. <a name="P16_75"></a>04/130

An International Monetary Fund mission has been in Buenos Aires for the last ten days or so to begin discussions for the third review of the economic program established by the Argentine authorities. The mission has had cordial and collaborative discussions with the authorities on the current state of the economy, the authorities' policies in relation to their program, and the reform agenda for sustaining high growth with poverty reduction.

Argentina's economic recovery continues to be strong. Twelve-month real GDP growth was close to10 percent in the latest, March 2004 quarter, reducing unemployment, and bringing real GDP closer to its pre-crisis level. Inflation is well-contained, the current account remains in substantial surplus, and reserves continue to accumulate. The performance of the consolidated fiscal primary surplus thus far in 2004 has been significantly ahead of the program. Quantitative performance criteria under the program have been observed.

The mission has reviewed progress in implementing the structural reform agenda that the authorities have established under their program, including, in particular: structural fiscal reforms intended to consolidate and sustain over the medium term the fiscal discipline and performance of the past two years; banking sector measures aimed at enhancing financial intermediation; their continuing efforts to restructure their sovereign debt; and, in collaboration with the World Bank, the mission has also reviewed policies toward the energy sector and utilities. At this stage, the authorities have told the mission that policies are evolving toward ensuring consistency with their program.

The next step is for the mission to return to Washington and discuss its findings with staff and management and for the authorities to continue to develop and elaborate policies in key areas of their program. There will be ongoing discussions toward defining policies that will achieve the essential objectives set by the authorities in their program.