Agreement with the IMF: for Christine Lagarde, approval of the Budget is key

October 27, 2018 - By Joseph Taylor

After chairing the meeting of the Executive Board of the IMF, which authorized an outlay of 53,600 million dollars for Argentina, the executive director of the agency, Christine Lagarde, stressed that the final approval of the Budget Act will be “key to restoring confidence” and predicted with optimism that the implementation of the policies that support the stand-by agreement, plus the support of the international community, “will allow the country to recover macroeconomic stability.”

In a statement issued after the board meeting, Lagarde said that “Argentina has faced difficult market conditions, but the authorities have remained firmly committed to the main objectives of the Stand-By Agreement policy to address vulnerabilities. long-standing, protect the vulnerable, ensure that public debt remains sustainable, reduce inflation and promote growth and job creation. “

 Immediately, the director emphasized the approval of the Budget – which got a green light yesterday in Congress, but still must be endorsed by the Senate – as a fundamental aspect for economic recovery. “To achieve these objectives, the authorities have redoubled their reform efforts by accelerating the reduction of the fiscal deficit to reach the primary balance in 2019 and achieve a primary surplus beginning in 2020. The 2019 budget, which is anchored in this objective, has been approved by the Lower House. Its approval as a law will be key to restoring confidence and ensuring the continuity of policies. “

 “Despite the challenging environment, the Government has proactively strengthened its policy plans. Important challenges remain. However, the full implementation of the policies that support the Stand-By Agreement, together with the strong support of the international community, should allow the country to recover macroeconomic stability and take advantage of its full economic potential for the benefit of all Argentines. ” with optimistic tone.

Regarding the control of inflation, the official said that “the authorities have redesigned their monetary policy framework with strict limits on the growth of the monetary base. It is expected that this framework will provide a simpler and more effective anchor that decisively reduces inflation and inflation expectations. On the exchange rate, he pointed out that “the authorities are allowing the currency to float freely. However, in the event that there is an extremely excessive fluctuation of the exchange rate, the Central Bank is prepared to intervene in a limited, simple and rules-based manner “.

Lagarde also highlighted two issues of particular concern to the Fund, given the magnitude of the recession facing Argentina and which will continue at least until the beginning of next year. “The program continues to emphasize improving gender equality, protecting the most vulnerable in society and laying the foundations for growth and job creation. Authorities have already taken measures to increase social assistance programs and have prioritized social assistance expenses and child care spending in the 2019 budget. “

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