The IMF recognized the slowdown in inflation, but insisted on improving pensions and social spending - Infobae
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El FMI reconoció la desaceleración de la inflación, pero insistió en mejorar las jubilaciones y el gasto social
La vocera del organismo, Julie Kozack, afirmó que la poda fiscal, el ancla cambiaria y el freno a la emisión preparan el terreno para una caída del ritmo de precios, aunque afirmó que el ajuste “no debe recaer sobre los más vulnerables”
www.infobae.com
March 07, 2024
The organization's spokesperson, Julie Kozack, stated that the fiscal pruning, the exchange rate anchor and the brake on issuance prepare the ground for a drop in the rate of prices, although she stated that the adjustment "should not fall on the most vulnerable."
By Mariano Boettner
Julie Kozack, spokesperson for the International Monetary Fund
The International Monetary Fund (IMF) once again requested that the Government reinforce spending on pensions and social assistance to prevent the adjustment from “falling disproportionately” on the salaries and the poorest sector of the population. In this context, the organization recognized that official measures prepare the ground for a marked drop in the rate of inflation in the coming months.
According to agency spokesperson Julie Kozack at a press conference this Thursday, the current program between the IMF and Argentina contains a “strong fiscal anchor” and the objective of “reinforcing the reserves” of the Central Bank. “There has been progress but the path is challenging , it requires rapid public policy measures,” said the official. On that level, she considered that “the effort to protect the most vulnerable is a pillar (of the program) so that the weight of the adjustment does not fall disproportionately on them ,” she stated.
He reiterated, thus, a consideration made by the deputy managing director of the IMF Gita Gopinath from Buenos Aires, two weeks ago. The number 2 of the organization had supported the general progress of the program but had paid special attention to retirements and social spending. This Thursday Kozack assured that the measures taken by the Government may result in a slowdown in prices, but that it must reinforce aid to more unprotected sectors.
The spokesperson said that “the strong fiscal consolidation, the brake on monetary issuance and the exchange rate policy” had macroeconomic effects and that “ results are being seen with inflation starting to go down .” "Because it is important? Because inflation is a tax on the poor . Given the delicate social situation, coupled with the already high poverty rates in Argentina, it will be important to ensure additional social assistance and preserve the real value of pensions ,” said Kozack.
The number 2 of the IMF had already warned about retirements and social spending in the midst of the strong fiscal adjustment
Gopinath, after having held his meeting with Javier Milei two weeks ago, had raised an alarm about the immediate effects of the Libertarian government's economic plan. “Given the short-term stabilization costs, it is essential to make sustained efforts to support vulnerable segments of the population and preserve the real value of social assistance and pensions, as well as to ensure that the burden of adjustment does not fall disproportionately on the working families . Working pragmatically to obtain social and political support is also essential to guarantee the durability and effectiveness of the reforms,” highlighted the IMF representative.
Kozack, for his part, avoided mentioning details about the progress towards a new financial program between the Government and the Monetary Fund, a possibility that both sides began to explore in recent weeks and that gained strength, although talks have not yet begun. formal towards that direction.
The chance of a new financial program appeared in Buenos Aires with the visit of Gopinath , continued with Kristalina Georgieva last week in São Paulo, where the summit of economic ministers and central bankers of the G20 was held. In the Executive Branch they assure that there is room for negotiation until November - when the disbursement scheme of the current program ends - but official sources suggest that there is room for a much faster resolution .
To reach an agreement the Government will need technical consensus and political support. On the technical agenda, the plans that the economic team has for the coming months will be a matter of discussion. The IMF believes that the Central Bank should accelerate the pace of crawling peg (devaluation of the official dollar) and that it should move to a scheme of positive real interest rates . The Government rules it out because it would imply, they say, “ a higher floor for inflation and we need to lower it as quickly as possible.”
