IMF says it’s ‘clear-eyed’ about risks to Argentine economy and new program

Argentina's peso value? It could cost the Peronists an election
A man stands next to dairy products in a supermarket in downtown Buenos Aires, Argentina November 8, 2021. REUTERS/Mariana Nedelcu

March 31, 2022

By Andrea Shalal

WASHINGTON (Reuters) – The International Monetary Fund and Argentine government have been “clear-eyed” about the exceptionally high risks facing the Argentine economy and a new $44 billion IMF program approved Friday, IMF spokesperson Gerry Rice said on Thursday.

Rice told reporters Argentina’s economy was recovering more strongly than expected after three years of recession and persistent high inflation, but it was also subject to the global shock caused by the war in Ukraine, and its economic and social situation was fragile.

“So, it’s no surprise that the risks to the Argentine economy, and therefore to the program, are high,” he said, adding that the IMF would work closely with Argentine authorities to ensure successful implementation of the program.

The executive board of the IMF last week approved a new $44 billion financing program, but said that it comes with “exceptionally high” risks.

It marks the 22nd IMF program for Argentina and comes after more than a year of negotiations. It replaces a failed $57 billion program from 2018, for which Argentina still owes over $40 billion.

Rice said the IMF’s board approved the new program because it set realistic and pragmatic objectives, along with credible policies, that would strengthen Argentina’s macroeconomic stability and begin tackling its deep-seated challenges.

Implementation would now be key, he said.

“Paraphrasing Winston Churchill, we’re at the end of the beginning of this process,” Rice said. “Now it’s all about implementation so that those objectives … can be achieved.”

While it saw the high risks involved, the IMF was committed to working closely with Argentine authorities to ensure successful implementation of the program, Rice said.

“It’s in our shared interest to have a program that can be owned and … successfully implemented by the Argentine authorities,” he said.

(Reporting by Andrea Shalal and David Lawder; Editing by Chizu Nomiyama and Nick Macfie)