All the Answers
Well-known member
Rodrigo Valdés of the IMF called for improving “the quality of fiscal adjustment, not the quantity” - Infobae
Source:
Rodrigo Valdés del FMI pidió mejorar “la calidad del ajuste fiscal, no la cantidad”
El director del Departamento del Hemisferio Occidental del organismo está en Buenos Aires para un encuentro empresario y aseguró que la inflación baja más rápido de lo esperado. Se reunirá con el ministro Luis Caputo
www.infobae.com
March 26, 2024
The director of the Western Hemisphere Department of the organization is in Buenos Aires for a business meeting and assured that inflation is falling faster than expected. He will meet with Minister Luis Caputo
By Mariano Boettner
Rodrigo Valdéz, director of the Western Hemisphere Department of the International Monetary Fund (IMF)
The director of the Western Hemisphere Department of the International Monetary Fund (IMF), Rodrigo Valdés , valued the economic program being carried out by the government of Javier Milei , praised the progress that “has been impressive” but called for improving the quality of the fiscal adjustment . “The quality, I want to emphasize, not the quantity,” he said.
“The new authorities are decisively implementing an ambitious stabilization plan to direct and restore macroeconomic stability,” said the senior Fund official during his participation in the IEFA Latam Forum held this Tuesday at the Four Seasons Hotel in Buenos Aires.
“As you know, the plan is focused on a very strong fiscal anchor that completely eliminates any financing from the Central Bank to the Government while combining it with policies to lower inflation, to increase reserves or also to reorganize the distortions that are preventing growth in the country,” he said.
“The progress so far has been impressive. There is a fiscal surplus in general, this was recorded in January and February for the first time in more than a decade. International reserves are being reconstructed, inflation is falling more quickly than we anticipated and indicators such as the parallel market and the exchange rate gap continue to improve,” Valdés assessed.
Valdés opened the IEFA Latam Forum held this Tuesday at the Four Seasons Hotel in Buenos Aires
“But the inheritance was heavy and the path to stabilization is never easy, it requires a strong implementation of policies in general,” he remarked before issuing his warning. “In this sense, it is very important to continue improving the quality of fiscal adjustment. Quality, I want to emphasize, not quantity ,” Valdés demanded.
“In relation to policies we also have to continue adapting throughout the transition and exchange controls must be calibrated very carefully. Furthermore, we believe it is very important to maintain efforts to support the most vulnerable sectors of the population to ensure that the heaviest burden of adjustment does not fall disproportionately on working class families,” he said.
Amid speculation about progress towards a new program, Valdés mentioned that “our commitment to the authorities is deep and constructive. We focus on the technical aspects, on designing policies to properly restore macroeconomic stability in Argentina. Furthermore, we share the authority's vision of creating a more open and market-oriented economy. And we bring greater prosperity to all Argentines,” he concluded.
The rest of his presentation focused on the macroeconomic situation of the region. Although the presence of the Secretary of Industry and Commerce Juan Pazo was expected , finally the official will not participate in that first panel. Yes, on behalf of the Executive Branch, President Javier Milei will be present at the closing of the event at the Four Seasons hotel at 6 p.m. and, a few hours before, the Secretary of Agriculture Fernando Vilella .
Luis Caputo will hold a meeting with the director of the Department of the Western Hemisphere Rodrigo Valdés in the continuity of the conversations towards a new program
Valdés' arrival implies the second visit by a senior IMF official in a month. In February, the deputy managing director, Gita Gopinath , passed through Buenos Aires , who was in the country to meet with President Javier Milei , Caputo and the president of the Central Bank Santiago Bausili and also with local businessmen, union members and economists. The following week, the Minister of Economy held a meeting with the head of the IMF, Kristalina Georgieva , within the framework of the G20 summit held in Sao Paulo, Brazil.
“Rodrigo Valdés, Director of the Western Hemisphere Department of the IMF, plans to meet with the authorities on the sidelines of his trip to Buenos Aires to attend the IEFA LATAM Forum. This is a common practice and simply a continuation of the ongoing technical conversations between IMF staff and the Argentine authorities,” said a spokesperson for the Monetary Fund when asked by Infobae .
The presence of Valdés, one of the highest-ranking officials, will continue the recent process of conversations between the organization and the national government to move towards a new agreement that in the coming months can pave the way for an exit from the exchange rate . A meeting is expected with the Minister of Economy Luis Caputo .
The comment by the Monetary Fund official about the quality of the adjustment comes in a context in which the Ministry of Economy carried out, in the first months of the year, a strong fiscal correction that was sustained by spending on social items and pensions. A report by the consulting firm PxQ estimated that 42% of the reduction in primary spending between January and February was explained by social benefits.
The IMF has an eye on the sustainability of the fiscal adjustment that the libertarian government intends to carry out in its first year in office, and which it located in a technical report as one of the most pronounced corrections - in terms of speed and magnitude - at the level global in recent decades. Both Gopinath, after his visit to the Argentine capital in February, and spokesperson Julie Kozack mentioned that the Government should support the purchasing power of pensions so that the adjustment does not fall “disproportionately” on those sectors.
