IMF economists return to Argentina after decade absence

Posted on September 29, 2016

It is a home coming of sorts for the International Monetary Fund. More than a decade after its economists were last welcomed in Buenos Aires, a delegation has returned.

On Thursday, the IMF completed its first article IV economic consultation* in Argentina since its economists were last received in 2006, US capital markets correspondent Eric Platt reports.

Roberto Cardarelli, who led the IMF team, said that “important progress has been made” since Mauricio Macri took office last December and unveiled a wave of reforms.

The country, after settling with holdout bondholders earlier this year over its $95bn default in 2001, has tapped bond markets to raise cash, removed stringent currency controls and sought to improve the credibility of its national statistics.

Mr Cardarelli said:

The government should be commended for its clear commitment to bring inflation to single digit levels and to reduce the fiscal deficit. The pace and composition of this shift in the fiscal position and the speed of disinflation will need to be sensitive to the impact on growth, jobs, and on the most vulnerable segments of the Argentine population.

Strengthening public expenditure management, further improving governance, and increasing the efficiency of public spending would create space for a much needed reduction of the tax burden while continuing reducing the fiscal imbalances. Finally, strong, sustained, and equitable growth will require the implementation of an ambitious agenda of supply-side reforms. Such reforms will create an environment that is more conducive to private investment and will generate significant medium-term dividends in terms of more and better jobs, as well as a steady improvement in living standards for Argentina’s population.

*Article IV consultations are typically annual examinations between the IMF and member countries that are required under Article IV of the IMF’s Articles of Agreement.

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