The International Monetary Fund has urged the government of Argentine President Javier Millay to shield the poor as he pursues tough austerity measures to cut government spending, according to an interview published on Sunday.
The IMF has praised Millay’s government for efforts to balance the books after years of overspending, but his draconian measures have led to strikes and raised concerns about growing hunger.
IMF deputy managing director Geeta Gopinath told La Nacion newspaper that austerity measures must be “calibrated to ensure that social assistance continues to be provided and that the burden does not fall entirely on the poorest groups”.
Gopinath visited Buenos Aires last week to review Argentina’s $44 billion credit program and met with Milei, members of his government, economists, union leaders and civil society organizations.
Since taking office in December, the libertarian Milei has devalued the peso by more than 50 percent, cut tens of thousands of public jobs and halved the size of government.
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He also removed generous government subsidies for transport and energy and froze aid to 38,000 households pending a review, hitting the poor hard as annual inflation soared to 254%.
“The economy inherited by this government was close to a crisis and required bold and decisive action to pull it off the precipice,” Gopinath said.
But he said more social measures were needed to “ensure that reducing the budget deficit does not fall on the vulnerable”.
Gopinath estimated that Argentina’s monthly inflation — which stood at 20 percent in January — will fall to single digits by mid-2024.
“But I think it will take at least a year to bring inflation down, and then keeping it at those levels until 2025 will also require efforts.”
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He said that for the IMF, it would be “critical” for the government to invest in human capital.
“Child poverty rates of more than 55% are extremely worrying. It is important that we ensure that this rate drops significantly and that we can invest more in education.”
Source: AFP