The International Monetary Fund corrects its forecasts for Argentina and expects a recession – DW – 01/31/2024

The economic situation will be much worse than expected this year Argentinawhich will suffer a recession of approximately 3%, the International Monetary Fund warned on Tuesday (01/30/2024) (International Monetary Fund), although he considered the fiscal adjustment promoted by hard-line liberal President Javier Miley “absolutely necessary.”

In October, the financial institution predicted that the South American country's economy would grow by 2.8% in 2024, but recently warned that it would contract by 2.8%, according to its update of the World Economic Outlook. It will be the only country in the G20 to suffer a recession this year.

The organization’s chief economist, Pierre-Olivier Gourincha, said at a press conference in Johannesburg: “It is a very important downward adjustment (…) but growth will resume in 2025 at about 5%.”

He added that this would not be possible unless “the financial consolidation that has actually begun in the country under the new administration” of Milley is achieved.

In less than two months of assuming power, Miley succeeded in devaluing the peso by 50% and began the process of liberalizing prices and reducing public spending.

The International Monetary Fund welcomed this radical reform program with open arms, which generated strong social rejection in Argentina. The country is going through a difficult crisis, with inflation reaching 211% in 2023, which Gorinchas says will fall to 150% by the end of 2024, “and then it is expected to decline further.”

Chief of Staff in Washington

On the same Tuesday, Nicolas Bossi, Miley's chief of staff, met in Washington with senior officials from the US Treasury Department to address the new economic shock plan.

Treasury Undersecretary for International Affairs Jay Champoei received Bossi and discussed with him “the progress the government has made toward stabilizing the Argentine economy,” according to reports.

Champo welcomed the “strong reform efforts” made by the Argentine government before the International Monetary Fund's Board of Directors ratified the new agreement with the South American country, the US Department said in a statement.

On January 10, Argentina and the Fund announced an agreement under which… The multilateral organization will distribute $4.7 billion So that the country can face upcoming debt maturities.

The agreement represents the seventh review of the extended facilities program signed in March 2022 to refinance debts contracted in 2018 during the era of Mauricio Macri’s government (2015-2019) at about $45 billion.

gs (afp, Cronista, efe, La Nación)