The holder of the IMF, Christine Lagarde, defended yesterday the gradualista strategy of the Government to lower the fiscal deficit. “It does not attack him brutally but contemplating the circumstances and the capacity of response of the society and the Argentine economy”. In addition, he praised the agenda that the Argentine government raised for his presidency of the G-20. “My expectations are high and it’s an ambitious agenda.”
The words of Lagarde, in a talk he gave with the Finance Minister, Nicolas Dujovne, were surely the kick of a series of praises that will be in the coming days in Argentina when bankers, investors, finance ministers and central bank presidents meet in Buenos Aires for a G-20 event – Monday and Tuesday -. In parallel there will be seminars and other talks. And, from next Thursday, the Annual Meeting of the IDB in Mendoza. It is expected that the investment world and authorities of central countries praise the program of the Argentine government to lower inflation and deficit. And yesterday Lagarde started.
The IMF manager went even further. He referred to the ‘economic’ critics of President Macri, the economists who point out that the government should lower the fiscal deficit in a more forceful way. “The orthodox could argue that it would be better to do it faster, but as long as there is decision and will and the primary fiscal deficit is reduced at one point it would be a great achievement too.” Dujovne said that by the end of the year, public spending will be equivalent to 38% of GDP. In 2015 it was 45%.
Lagarde, who focused his presentation on the perspectives of the global economy before an audience composed mostly of economists, clarified the purpose of his visit to the country. “I did not come to negotiate any credit or program with Argentina. I’m not in the business of lending. Argentina neither needs nor asked for it. ” With this, the one of the IMF discarded that the Government and the organism are in negotiations of some line of credit.
The meeting was at the Di Tella University. He brought together economists from the private sector such as Gustavo Cañonero (SBS group), Javier Finkman (HSBC), Miguel Angel Broda (Broda Study), Daniel Marx (Quantum) and Juan Carlos Barboza (Itaú). There were also Eduardo Levy Yeyati, Ernesto Schargrodsky – rector and moderator of the talk – and members of Dujovne’s team, such as Guido Sandleris (head of tax advisors), Ariel Sigal (head of the Treasury Department) and Laura Jaitman (Treasury representative in the G-20). In the classroom where the IMF chief spoke, no photographers or media cameras were allowed. Neither bags or backpacks. Perhaps an advance of the security exercises that Buenos Aires will see this weekend when the first summit of finance ministers and presidents of central banks of the G-20 starts.
Precisely about the meeting of this group and Argentina, Lagarde left a definition on the role of the country: “They have a key role to strengthen global cooperation.” Before, the manager had talked about the risks facing the global economy. He mentioned three: the impact of the increase in the interest rate in countries where the indebtedness of families is not low, the unpredictability of tariff policies and the excessive inequality that was accentuated after the financial crisis of 2009.
The G-20 brings together the main countries of the world and the meeting that will begin on Monday will gather only those responsible for economic policies -ministeries of Economy and central banks-. But the IMF sits in a chair where economies around the world seek to coordinate their objectives. Hence the presence of Lagarde in Buenos Aires.
Beyond the risks pointed out by the head of the IMF, the global outlook she drew is optimistic because it calculates that the world will grow 3.9% this year and that is positive for Argentina. The IMF, since last October, estimates that the country will grow 2.5% in 2018. Given that the world is growing, it is time to face pending reforms, said Lagarde. Yesterday, in a note on an IMF blog, the owner mentioned Argentina among the group of countries that should put their fiscal accounts in order. Nothing new. This is what he said in his last WEO. Dujovne himself said in front of the French that for Argentina “it is key to attack the fiscal deficit and fulfill the fiscal program” in order to attract investment. He promised that the growth rate of the investment will accelerate in 2018 and reach 15%. “Foreign direct investment was 1.7% of GDP”.