Argentina’s new economy minister said Monday the country will honor budget deficit targets and other commitments made under a deal reached with the IMF to refinance about $44 billion of debt.
Under the deal negotiated by Silvina Batakis’ predecessor Martin Guzman, who abruptly resigned nine days ago, Argentina committed to reducing its budget deficit from 3.0 percent of GDP last year to 2.5 percent in 2022, 1.9 percent in 2023 and 0.9 percent in 2024.
“The goals agreed with the IMF will be met,” said Batakis at her first press conference since taking office a week ago in Buenos Aires.
“It’s an agreement that we signed as a state and we have to honor it.”
In 2018, under the government of Conservative President Mauricio Macri, the International Monetary Fund made its largest-ever loan to Argentina of $57 billion.
Of that, the country received $44 billion, and Macri’s successor, Alberto Fernandez, refused to accept the rest.
As the country struggled to repay its debt, a refinancing agreement was reached this year after lengthy negotiations.
Guzman abruptly resigned on July 2 amid a power struggle between Argentina’s president and his vice president, sparking fresh uncertainty in Latin America’s third-largest economy.
The peso fell sharply against the US dollar last Monday after Batakis’ appointment.
On Monday, the 53-year-old said it was necessary “to bring order and balance to public finances” and vowed “we will not spend more than we have”.
Among their proposals: reduce energy subsidies, which amounted to $11 billion or 2.3 percent of GDP in 2021, by tiering gas and electricity prices based on income.
In 2020, Argentina’s economy shrank 9.9 percent before rebounding 10.3 percent the following year.
The IMF forecasts growth of 4.0 percent for this year.
At the time the refinancing agreement was finalized, Argentina’s inflation was forecast at 52 percent for 2022 – already one of the highest in the world.
Since then, the war in Ukraine has pushed up prices around the world, with Argentina posting annual inflation of 60 percent in May.
“The agreement was signed before global inflation rose,” Batakis said, adding that a new estimate for 2022 would be prepared.
“It’s a methodological issue that we’re evaluating, not a shift in goal,” she stressed.
A Central Bank of Argentina survey of projections for inflation in 2022 put the rate at about 76 percent.
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