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UPDATE 1-IMF says more reforms needed to restore growth in Argentina
September 29, 2016 / 10:07 PM / a year ago

UPDATE 1-IMF says more reforms needed to restore growth in Argentina

(Recasts with statement)

By Caroline Stauffer and Maximiliano Rizzi

BUENOS AIRES, Sept 28 (Reuters) - Progress has been made in correcting imbalances in Argentina’s economy but sustained growth would require more reforms, the International Monetary Fund (IMF) said on Thursday after its first mission to the country in 10 years.

Roberto Cardarelli, head of the mission, said in a statement that improving governance and increasing the efficiency of public spending would help lower the tax burden and reduce fiscal imbalances.

The Sept. 19-29 visit came after President Mauricio Macri, who took office in December, threw open Argentina’s economy to investors after 12 years of leftist rule, isolation from capital markets, and government opposition to the IMF.

Cardarelli, division chief of the IMF’s North America Division, said Macri’s government should be commended for its commitment to bringing down inflation and reducing the fiscal deficit.

He said the policy changes had “unavoidably” had an adverse near-term impact on Argentina’s economy and that discussions with officials had focused efforts on restoring growth, boosting job creation and protecting vulnerable segments of society.

Argentina’s government expects the economy to contract 1.5 percent in 2016 and grow 3.5 percent in 2017.

“Strong, sustained, and equitable growth will require the implementation of an ambitious agenda of supply-side reforms,” Cardarelli said in the statement.

Earlier, Alejandro Werner, director of the IMF’s Western Hemisphere Department, also praised Argentina’s reform efforts, saying investments would come “slowly... but in significant magnitude in coming years” as a result.

The IMF last held a so-called Article IV consultation, normally annual affairs for IMF members, in Argentina in July 2006. The IMF has also closely followed a revamp of Argentina’s statistics agency after declaring data under former president Cristina Fernandez unreliable.

Many Argentines, however, share the previous government’s opinion that the IMF was at least partly responsible for the economic crisis following its 2001 default, making the IMF visit politically sensitive.

“We do not need to pay attention to the IMF, but we have no reason to hide the numbers from them either,” Finance Minister Alfonso Prat-Gay said recently, according to state-run news agency Telam.

The IMF said in August it would likely lift its censure on Argentina’s data this year after changes were made in the way gross domestic product and inflation are measured. (Additional reporting and writing by Caroline Stauffer; Editing by Meredith Mazzilli and Bernard Orr)

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