Hosted by the President-elect of Argentina Javier Milly On Friday, he held his first meeting with International Monetary Fund Director General Kristalina Georgieva and discussed the country’s economic situation with her.
Milley wrote on the “X” platform (formerly Twitter), “I had a great conversation today (Friday) (with Georgieva) during which we talked about the huge economic challenges facing our country.”
Milley confirmed that he had spoken with Georgieva on “all aspects of the financial adjustment program and the monetary program,” and the IMF expressed its willingness to work together to find the structural solutions Argentina needs.
Georgieva also said through the X platform that she discussed with the Argentine president “the huge challenges facing the Argentine economy and the decisive political measures that must be taken.”
Georgieva stressed that the IMF is committed to supporting efforts to sustainably reduce inflation, improve public finances and promote private sector-led growth.
The foundation still must pay Argentina $3.3 billion by the end of the year as part of the aid package.
Latin America’s third-largest economy is struggling to repay a massive $44 billion loan it received from the International Monetary Fund in 2018 due to an unprecedented drop in foreign exchange reserves.
About 10 years ago, inflation rates exceeding 10% were the norm in Argentina, but this year inflation has risen sharply, reaching an annual rate of 143%, a 32-year precedent, while the local currency, the peso, continues to depreciate.
The Economist reported that the economic situation faced by Argentina’s new president is much more difficult than any president in recent years.
The newspaper reported that the situation in Argentina is dire, with inflation expected to reach 200% early next year and four out of 10 Argentines living in poverty.
The newspaper reported that Argentina’s public debt accounts for 90% of its GDP and its fiscal deficit accounts for about 10% of its GDP.
According to the newspaper, the Milley government will have to take three emergency economic measures:
- First, rapid austerity to reduce the fiscal deficit, with pensions and fuel subsidies an obvious target area.
- Second, liberalize the exchange rate system, although this will lead to currency devaluation and stimulate inflation. This is inevitable because Argentina no longer has many dollars.
- Third, the country needs to restructure its debt and reduce it to sustainable levels.