Special Analysis on Recent IMF Programs and What They Imply Argentina

I. The economic scenario before and after the elections and the role of the IMF

It is increasingly clear that the government is taking every economic decision with an eye on the election and that the 4.8% March inflation rate was a disruptive figure and a potential threat.  It was totally unexpected, much higher than anyone was projecting. This jeopardized the strategy of avoiding disruptions on the way to the elections. The risks are clear.  The parallel exchange rates, wage negotiations and expectations all add momentum to an inflation process that the government is finding difficult to maintain under control. 

II. What Is The IMF Program Going to Look Like? 

In 2021 the economy is set to recover somewhere between 6 and 8% depending on the severity of the second wave of Covid and the speed of delivery of vaccination. With elections in October we allocate little chances, if any, to reaching an agreement with the IMF before then. The assumption is that a program with the Fund can pave the way for having a roadmap in terms of fiscal and monetary policies as well as some “structural reforms”.