Before meeting with Caputo, the IMF official called for improving “the quality of fiscal adjustment, not the quantity.”

The director of the Western Hemisphere Department of the International Monetary Fund (IMF), Rodrigo Valdés, praised the economic program of the government of Javier Milei, but called for improving the “quality” of the fiscal adjustment. Valdés pointed out that the legacy was “heavy,” so the “road to stabilization is never easy” and requires the implementation of “strong policies in general.” “In this regard, it is very important to continue improving the quality of fiscal adjustment. Quality, I want to emphasize, not quantity,” demanded the IMF official during his participation in the IEFA Latam Forum held at the Four Seasons Hotel in Buenos Aires.It should be noted that most of the surplus in February 2024 was explained by the liquefaction of pensions. According to a report by the IARAF (Argentine Institute of Fiscal Analysis), the items with the greatest real year-on-year decrease would have been: total transfers to provinces (-65%), Goods and services (-46%), benefits from the National Institute of Social Services for Retirees and Pensioners (INSSJP-PAMI), (-39.5%), Universities (-30.1%) and Family Allowances (-15.6%). Regarding the economic program, he stressed that it is an “ambitious plan” for stabilization. “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 impeding growth in the country,” he summarized. In this regard, the IMF official said: “The progress so far has been impressive. There is a fiscal surplus overall, this was recorded in January and February for the first time in more than a decade. International reserves are rebuilding, inflation is falling faster than we anticipated, and indicators such as the parallel market and the exchange rate gap continue to improve.” Valdés’ arrival is the second visit by a senior IMF official in a month, since at the end of February the deputy managing director of the organization, Gita Gopinath, was in Buenos Aires, meeting with Javier Milei, the Minister of Economy, Luis Caputo and the president of the Central Bank, Santiago Bausili, as well as with businessmen. trade unionists and local 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 São Paulo, Brazil.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. In addition, we share the authority’s vision of creating a more open and market-oriented economy.” The senior IMF official is expected to meet with the economy minister to continue the recent process of talks between the organization and the national government to move toward a new agreement that in the coming months could pave the way for a way out of the exchange rate clamp.

Original source in Spanish