“We are using all the tools available to overthrow the Argentine sovereign risk and make room for financing to the private sector,” said the Minister
The minister of Economics in Argentina, Nicolás Dujovne, estimated a growth of 5.2% by the end of 2019 thanks to the new agreement reached with the International Monetary Fund (IMF), which he said will make the necessary reforms to capture investments and stabilize the economy.
Next, a summary of the talk between Dujovne and the journalists in New York, after announcing this Wednesday the new program with the managing director of the IMF, Christine Lagarde.
-As negotiated with the IMF, Argentina will receive 7.1 million dollars in addition to the 50 million dollars received in June. Did the government of Mauricio Macri expect more?
We asked for an acceleration of disbursements and the decision to provide more fresh funds emerged from the fund. We are really very satisfied with the program that we have achieved.
-Can the reduction of the fiscal deficit with the new disbursements of the fund be slower?
No way. Here we are doing a double clamping job: We lower the need for funding because we lower the deficit and increase the funding because we review the program with the fund. That gives us a huge financial power that has to produce a very significant drop in interest rates facing Argentina. But we’re not looking for more funding to relax the fiscal program. We are using all the tools available-as an improvement in fiscal policy and an increase in financing-to overthrow the sovereign risk of Argentina and make room for financing to the private sector.
-With this plan will we have to wait more to get out of the recession?
I think there is nothing more expansive for the Argentine economy than lowering volatility, increasing confidence, reopening the credit market for the government, businesses, provinces, and to return funding to Argentina. Restoring confidence and lowering interest rates is today’s key to growing back.
-Disbursements will be given at important election times. This is an explicit endorsement of the IMF to President Macri, who was already said ready to seek re- election in October 2019?
The endorsement is not given by the disbursement calendar, but by the support of the international community. The IMF is a multilateral agency and it is the great countries of the world that have decided to support Argentina. There is a total consensus that Argentina deserves to be supported in the reform process. In addition, given the disburseable nature of the funds, Argentina will be pre-financed for a long time as we have never been before.
-They were wrong about something in the previous agreement and that’s why they had to review it?
The financial program agreed in June did not account for the new round of volatility that the emerging countries had, such as Turkey and Brazil, and the “crisis of the Notebooks” (a case of bribery that is investigated at a high level in Argentina). Let’s not minimize it, because countries that went through similar crises had very large and long-lasting recessions. The uncertainty that brought us the legacy of corruption from the previous government was very damaging to short-term expectations, although it is an event that helps us to build a healthier Argentina. So, what we did was adapt to the change of circumstances.
-When will Argentina grow again?
Probably in the first quarter of 2019, measured in comparison against the fourth quarter of this year. The Argentine program, supported by the international financial community, allows the economy in a few months to start growing. In the fourth quarter of 2019 we calculated an annual growth of 5.2%.