Argentine government officials struck a confrontational tone towards international financial institutions this weekend in Washington – a stance that is likely to be maintained at least until the presidential elections in a year’s time.
Mercedes Marco del Pont, governor of Argentina’s central bank, said in Washington yesterday: “They try to make us believe that the policies that were at the roots of the crisis are now part of the solution.”
Her remarks reflect the poor relations between Argentina and the international financial community, which seem to be nowhere near normalization, several months after completing its debt exchange.
Current strong domestic growth may be derailed if current imbalances persist.
Finance minister Amado Boudou has indicated Argentina’s willingness to reengage with international capital markets, and several Argentine provinces have managed to do so recently in recent weeks. But IMF officials have not learned of any indication so far that Argentina is ready to meet the required preconditions.
Indeed, president Cristina Fernandez de Kirchner made it clear last week when she met German chancellor Angela Merkel that her government would not accept a statutory IMF review under the Fund’s Article 4, as a prelude to an agreement with the Paris Club of creditors.
An IMF source told Emerging Markets: “They are trying to make a lot of noise about reaching an agreement without the IMF, but it seems that the Paris Club has not actually agreed to change its rules.”
Alejandro Vanoli, head of the local securities exchange commission, recently suggested that Argentina was ready to release some information to the G20, but not to the IMF.
Nicolas Eyzaguirre, the IMF’s Western hemisphere director, said: “We have not had any news about the Article 4 consultation. In our talks with the Argentine authorities ... it is constantly excluded, and our discussion on economic development is as well.”
Furthermore, the IMF has been increasingly critical of the reliability of Argentina’s statistics. Eyzaguirre has reported “discrepancies between the public and private estimates, both in terms of inflation and more recently in terms of the geographic gross product.”
Nevertheless, Eyzaguirre stated that “domestic demand is growing fast, especially in the south, given the traction of high commodity crisis. ... The output is growing fast, way faster than anticipated, but also public policy, fiscal and monetary policy in our understanding is still on the [stimulus] side. So it would be our advice that, as in other countries, the degree of impulse of public policy should be moderated in order to make growth more sustainable.”
The IMF expects Argentina to post GDP growth of 7.5% this year and some economists say that, although economic policy is becoming increasingly unorthodox, the macro economic picture is actually looking brighter.
Eduardo Levy-Yeyati, director of the Cippec think tank and a former chief economist at the Argentine central bank, said: “The fundamentals have improved a lot. Financial accounts are exceptionally good.
“[Argentina] has one of the best profiles of the region and they have better debt ratios [net debt to GDP is around 20% of GDP]. This is a huge upside. However, this has come at the expense of chronic inflation. Policies are not the most elegant in the region, but they are delivering high growth.”