Argentina’s runaway inflation has not only drawn criticism from the opposition and even some government sectors in the country – there have also been harsh comments from the International Monetary Fund.
“Inflation is crippling the economy in Argentina,” concluded Ceyla Pazarbasioglu, IMF strategic director and Turkish economist tasked with assessing the consistency of local data in light of the IMF deal.
“Inflation is harder on the most vulnerable” and it is imperative “to get it under control,” Pazarbasioglu said in a TV interview, explaining that the decision to raise interest rates to 47% “is part of the agreement that Argentina has reached with the IMF.”
In this context, she added: “We are seeing shock after shock in the global economy, including the financial crisis, the coronavirus and the war. Many countries have unsustainable debt” requiring careful work on the part of the IMF, governments and the private sector.
Via Twitter, the economist called on “the international community to urgently support vulnerable countries through coordinated actions ranging from emergency food supplies to financial support, including increasing agricultural production and opening of trade”.
The comments came as opposition leaders lined up to hammer the government following INDEC’s revelation that inflation had hit 6.7% in March.
Describing inflation as “a hidden tax that eats away at the income of those who work”, Buenos Aires City Mayor Horacio Rodríguez Larreta called for “a comprehensive economic plan” to tackle rising prices.
“The national government has an obligation to solve this problem urgently, but the solution will never come by boasting of not having an economic plan, but exactly the opposite. There are no magic solutions, it is a lie that there is a secret formula to unlock this problem. The only thing that solves inflation is a coherent and serious global economic plan. The government has not presented it yet, we Argentinians are waiting for it “said the head of Juntos por el Cambio.
PRO MP María Eugenia Vidal complained that the government was repeating unsuccessful policies, while radical MP Martín Tetaz blamed government money printing for the rate.
Fellow opposition MP Waldo Wolff said the ruling coalition was “breaking social contracts”, while calling on them to “take matters into their own hands”.
New IMF fund
Meanwhile, the IMF has approved the creation of a new Resilience and Sustainability Trust (RST), intended to boost the economies of poor and middle-income countries from next month in the context of “climate change and pandemics”. , from which Argentina stands to recover US$1.3 billion in special drawing rights (SDRs).
“The RST will expand the impact of the US$650 billion allocated last year to channel funds from our economically stronger members to countries where the need is greatest. The ambition is to set up a trust of at least $45 billion as aid to vulnerable countries facing longer-term challenges that pose risks to their economies and peoples,” commented the IMF Managing Director. , Kristalina Georgiava.
Last August, Argentina received $4.334 billion in special drawing rights which were deposited as reserves at the Central Bank and used to pay part of the debt to the IMF.
Monies from the new trust can be returned over a 20-year period, “helping to build resilience against long-term risks to balance of payments stability,” Georgieva said in an official statement.