## IMF Executive Board Concludes Article IV Consultation with Argentina

_IMF News, November 10, 2016_

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## Bibliographic details
- Published: November 10, 2016

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### Overview and Context
- Date: November 10, 2016 (Article IV conclusion noted on November 9, 2016)
- Main judgment: Argentinean government achieved important progress in a transition toward a better economic policy after pervasive macroeconomic imbalances, microeconomic distortions, and a weakened institutional framework.
- Key policy moves implemented in 2016:
  - Peso is market determined and exchange controls have been essentially eliminated.
  - Utility tariffs increased to bring prices more in line with underlying costs.
  - Settlement with creditors enabled return to international capital markets for private and public sectors.
  - Medium-term fiscal and inflation targets announced alongside a transition toward a modern system of inflation targeting.
  - National statistics agency is being rebuilt to publish improved and credible statistics.

### Economic Outlook and Projections
- Near-term impact: Reversal of previous imbalances had an adverse near-term impact; recession began before the new administration took office.
- Growth projections:
  - Economy expected to rebound from a -1.8 percent recession in 2016 to a 2.7 percent growth in 2017.
  - Growth expected to be "at a close to 3 percent pace over the medium term."
- Drivers and headwinds:
  - Planned fiscal rebalancing represents a modest headwind.
  - Offsetting factors: pickup in private consumption (as inflation falls), improving external environment, rebound of private investment.
  - Outlook characterized by greater than normal uncertainty.

### Policy Priorities and Recommendations (Executive Board Assessment)
- Fiscal policy
  - Continue lowering the fiscal deficit; maintain sensitivity to impacts on growth, jobs, and the most vulnerable while keeping clear medium‑term objectives.
  - Directors broadly viewed the authorities’ gradual reduction of the fiscal deficit as appropriate; some Directors saw scope to accelerate deficit reduction if activity is stronger than expected.
  - Institutional reforms to improve fiscal framework efficiency and credibility, including:
    - Introduce a simple and transparent medium‑term fiscal policy plan.
    - Rationalize government spending, including the wage bill.
    - Remove poorly targeted and distortionary energy subsidies.
    - Restore financial sustainability to the pension system.
    - Make the tax system more progressive over time to reduce the tax burden and increase efficiency.
    - Address issues related to fiscal federalism.
- Monetary policy and inflation
  - Authorities committed to bring inflation to single digit levels by 2019.
  - Maintain price stability mandate and secure operational independence of the central bank.
  - Eliminate monetary financing of the deficit to lessen economic and social costs of disinflation.
  - Authorities maintained real interest rates broadly constant in positive territory and lowered the policy rate since Spring as forward-looking inflation indicators fell.
- Structural and supply-side reforms
  - Ambitious agenda to improve business climate and achieve strong, sustained, and equitable growth:
    - Promote competition.
    - Improve regulatory framework for energy and utilities and fully realign utility tariffs toward cost recovery.
    - Institute a transfer scheme to protect the poor during adjustment.
    - Improve infrastructure quality, lower trade barriers, and develop local capital markets.
  - Emphasize governance and anti-corruption reforms; scale back government involvement in private industries and improve governance framework.
- Social and distributional considerations
  - Pace of disinflation and fiscal consolidation should be attuned to economic costs and distributional impacts.
  - Directors encouraged authorities to reach out to stakeholders to secure broad support for reforms.

### Selected Economic and Financial Indicators (key figures from IMF staff table)
- National income, prices, and labor markets (annual percent changes unless indicated)
  - GDP at constant prices: Average 2009–14 = 1.5; 2015 = 2.5; 2016 = -1.8; 2017 (Proj.) = 2.7; 2018 = 2.8; 2019 = 2.9; 2020 = 3.1; 2021 = 3.3.
  - Domestic demand: Average 2009–14 = 2.6; 2015 = 3.7; 2016 = -2.2; 2017 = 3.4; 2018 = 3.6; 2019 = 3.5.
  - Consumption (Private): 2016 = -1.7; Public: 2016 = 4.5 and 2017 = 6.6? [table presents values across categories—see full table for context].
  - Investment: Average 2009–14 = 4.2; 2015 = -3.6; 2016 = 8.2; 2017 = 7.2; 2018 = 5.9; 2019 = 5.8.
  - CPI inflation (eop, y/y percent change): 2015 = 39.4; 2016 = 20.5; 2017 = 17.5; 2018 = 13.0; 2019 = 10.3; 2020 = 9.4.
  - Unemployment rate (percent): Average 2009–14 = 7.5; 2015 = 9.2; 2016 = 8.5; 2017 = 8.3; 2018 = 6.9.
- External sector and savings-investment
  - Exports f.o.b. (goods, billions of U.S. dollars): Average 2009–14 = 71.9; 2015 = 56.8; 2016 = 55.3; 2017 = 57.2; 2018 = 59.5; 2019 = 62.0; 2020 = 65.6; 2021 = 68.9.
  - Imports f.o.b. (goods, billions of U.S. dollars): 2015 = -60.1; 2016 = -57.2; 2017 = -51.6; 2018 = -56.4; 2019 = -61.1; 2020 = -65.5; 2021 = -70.2; 2022 = -74.5 (table formatting retains negative sign convention).
  - Trade balance (goods, billions of U.S. dollars): Average 2009–14 = 11.7; 2015 = -0.4; 2016 = 0.8; 2017 = -1.5; 2018 = -3.5; 2019 = -4.5; 2020 = -5.6.
  - Total external debt (percent of GDP): 2009–14 average = 31.4; 2015 = 25.2; 2016 = 31.7; 2017 = 32.5; 2018 = 33.8; 2019 = 34.5; 2020 = 34.6.
  - Gross domestic investment (percent of GDP): 2009–14 average = 16.3; 2015 = 15.9; 2016 = 15.8; 2017 = 16.5; 2018 = 17.1; 2019 = 17.6; 2020 = 17.9; 2021 = 18.2.
  - Gross national savings (percent of GDP): 2009–14 average = 13.4; 2015 = 13.5; 2016 = 13.3; 2017 = 13.7; 2018 = 13.9; 2019 = 14.0.
  - Current account balance (percent of GDP): 2009–14 average = -2.3; 2015 = -3.2; 2016 = -3.9; 2017 = -4.2.
- Public sector (percent of GDP unless otherwise indicated)
  - Primary balance: 2009–14 average = -5.4; 2015 = -5.1; 2016 (Proj.) = -4.1; 2017 = -3.0; 2018 = -2.0.
  - Federal government primary balance: 2015 = -1.4; 2016 = -5.0; 2016 (federal gov’t primary) = -4.8? [table includes multiple federal indicators—consult full table].
  - Overall balance: 2009–14 average = -2.7; 2015 = -6.6; 2016 = -7.3; 2017 = -6.9; 2018 = -6.2; 2019 = -3.8; 2020 = -2.4; 2021 = -6.5; 2022 = -6.3; 2023 = -4.4 (table rows continue).
  - Revenues: 2009–14 average = 30.7; 2015 = 34.0; 2016 = 32.3; 2017 = 32.2; 2018 = 32.0; 2019 = 31.8.
  - Primary expenditure: 2009–14 average = 33.1; 2015 = 38.0; 2016 = 37.4; 2017 = 36.3; 2018 = 35.0; 2019 = 33.5.
  - Total public debt (federal): 2009–14 average = 43.3; 2015 = 52.1; 2016 = 51.8; 2017 = 51.1; 2018 = 51.2; 2019 = 50.0; 2020 = 48.4; 2021 = 47.5.
- Money and credit
  - Monetary base (eop, y/y percent change): 2009–14 average = 27.5; 2015 = 34.9; 2016 = 24.4; 2017 = 23.7; 2018 = 20.7; 2019 = 13.8; 2020 = 12.8.
  - Credit to the private sector (eop, y/y percent change): 2009–14 average = 28.9; 2015 = 35.6; 2016 = 26.4; 2017 = 21.2; 2018 = 18.4; 2019 = 14.8; 2020 = 15.3.
  - Credit to the private sector real (eop, y/y percent change): 2009–14 average = -9.3; 2015 = 0.6.
  - LEBAC interest rate (average) 2/: 2009–14 average = 16.0; 2015 = 28.1; 2016 = 29.8; 2017 = 20.1; 2018 = 13.1.
  - LEBAC real interest rate (average) 2/: 2009–14 average = 5.0; 2015 = 5.1.
  - LEBAC interest rate (eop) 2/: 2015 = 28.3; 2016 = 22.8; 2017 = 17.7; 2018 = 15.1; 2019 = 13.2.
- Memorandum items
  - Gross international reserves (billions of U.S. dollars): 2009–14 average = 42.0; 2015 = 25.6; 2016 = 33.3; 2017 = 36.5; 2018 = 49.2; 2019 = 56.5; 2020 = 61.2; 2021 = 66.6.
  - Exchange rate (eop, Arg$/US$): 2009–14 average = 5.3.
  - Change in REER (average, percent change): 2009–14 average = 6.7; 2015 = 26.0; 2016 = -12.8.
  - Transfers from BCRA: 0.9; 1.4; 0.2 (table lists these memorandum figures).

(Note: table entries are reproduced verbatim where provided; consult the full published table for cell-level alignment and additional rows.)

### Final Board Observations
- Executive Directors strongly welcomed Argentina’s resumption of the Article IV consultation and underscored importance of continued close engagement between authorities and IMF staff.
- Directors encouraged authorities to remain steadfast in reforms and to secure broad stakeholder support to ensure sustained, equitable growth and job creation while protecting the poor during macroeconomic stabilization.

*International Monetary Fund — Press Release No. PR16/500*

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## References

- [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2016/11/10/pr16500-imf-executive-board-concludes-article-consultation-with-argentina_