Economy Argentina will get next installment of bailout as IMF praises Milei’s austerity policies

[LeonardoBjj]

BY ISABEL DE BRE
Updated 2:39 PM BRT, May 13, 2024

BUENOS AIRES, Argentina (AP) — The International Monetary Fund, Argentina’s biggest creditor, agreed Monday to release the next tranche of loans due under a bailout program, endorsing government austerity measures so severe they even surpass the terms of its $43 billion loan.

The IMF deal follows the completion of its review of Argentina’s compliance record and confirms the next $792 million payment will become available to the government in June, reassuring markets and boosting confidence among bankers about Argentina’s prospects as it goes through its worst economic crisis in two decades.

The decision by the fund’s technical staff still requires final approval from the IMF’s executive board, which could take weeks.

Argentina’s annual inflation rate reached 287% in March, among the highest in the world, deepening poverty and spurring strikes and protests. But the IMF praised President Javier Milei’s libertarian government for a number of economic successes — Argentina’s first quarterly fiscal surplus in 16 years, falling monthly inflation and surging sovereign bond prices.

To overhaul the beleaguered economy, Milei has slashed public sector wages, eliminated thousands of state jobs, frozen public works projects and and cut subsidies. He has also devalued the nosediving peso currency by over 50%, helping it stabilize but causing the prices of basic goods to skyrocket.

Although brutal for Argentina’s poor and middle classes, the market-friendly overhaul has “resulted in faster-than-anticipated progress in restoring macroeconomic stability and bringing the program firmly back on track,” the IMF said, thanking Argentine authorities for “the decisive implementation of their stabilization plan.”

The praise marks a dramatic turn-around from the past six decades during which Argentine politicians showed little interest in enacting reforms stipulated as part of borrowing agreements.

Previous left-leaning governments fell far short of IMF targets and relied on central bank money printing to finance treasury spending, pushing the country’s IMF program — launched in 2018 and refinanced in 2022 — to a breaking point.

The international lender remains deeply unpopular in Argentina, where the public blames it for an economic implosion and debt default in late 2001. The IMF later acknowledged it made mistakes contributing to the collapse.

It’s rare for a country to have the IMF as its biggest creditor. Argentina is in the strange position of relying on money lent by the fund to repay the fund itself.

https://apnews.com/article/milei-ar...conomy-funds-b3b82978d3971ce6148f6f26f2d8e97b

 

[fungi]

Millei sold out!
Poor Argentinians...

 

[LeonardoBjj]

Millei sold out!
Poor Argentinians...

- I dind't had many faith on this guy. Maybe he can take Argentina economy from the mud?

 

[LeonardoBjj]

Millei sold out!
Poor Argentinians...

Argentina reports its first single-digit inflation in 6 months as markets swoon and costs hit home​

BY ISABEL DEBRE
Updated 4:55 PM BRT, May 14, 2024

BUENOS AIRES, Argentina (AP) — Argentina’s monthly inflation rate eased sharply to a single-digit rate in April for the first time in half a year, data released Tuesday showed, a closely watched indicator that bolsters President Javier Milei’s severe austerity program aimed at fixing the country’s troubled economy.

Prices rose at a rate of 8.8% last month, the Argentine government statistics agency reported, down from a monthly rate of 11% in March and well below a peak of 25% last December, when Milei became president with a mission to combat Argentina’s dizzying inflation, among the highest in the world.

“Inflation is being pulverized,” Manuel Adorni, the presidential spokesperson, posted on social media platform X after the announcement. “Its death certificate is being signed.”

Although praised by the International Monetary Fund and cheered by market watchers, Milei’s cost-cutting and deregulation campaign has, at least in the short term, squeezed families whose money has plummeted in value while the cost of nearly everything has skyrocketed. Annual inflation, the statistics agency reported Tuesday, climbed slightly to 289.4%.

“People are in pain,” said 23-year-old Augustin Perez, a supermarket worker in the suburbs of Buenos Aires who said his rent had soared by 90% since Milei deregulated the real estate market and his electricity bill had nearly tripled since the government slashed subsidies. “They say things are getting better, but how? I don’t understand.”

Milei’s social media feed in recent weeks has become a stream of good economic news: Argentine bonds posting some of the best gains among emerging markets, officials celebrating its first quarterly surplus since 2008 and the IMF announcing Monday it would release another $800 million loan — a symbolic vote of confidence in Milei’s overhaul.

People eat a free breakfast served by a soup kitchen that was set up at the Obelisk as a protest against the city government’s “hygiene and cleanliness” policy in Buenos Aires, Argentina, Tuesday, May 14, 2024. The policy involves authorities removing the homeless from the streets. (AP Photo/Gustavo Garello)

“The important thing is to score goals now,” Milei said at an event Tuesday honoring former President Carlos Menem, a divisive figure whose success driving hyperinflation down to single digits through free-market policies Milei repeatedly references. “We are beating inflation.”

Even so, some experts warn that falling inflation isn’t necessarily an economic victory — rather the symptom of a painful recession. The IMF expects Argentina’s gross domestic product to shrink by 2.8% this year.

“You’ve had a massive collapse in private spending, which explains why consumption has dropped dramatically and why inflation is also falling,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics who studies emerging markets. “People are worse off than they were before. That leads them to spend less.”

Signs of an economic slowdown are everywhere in Buenos Aires — the lines snaking outside discounted groceries, the empty seats in the city’s typically booming restaurants, the growing strikes and protests.

At an open-air market in the capital’s Liniers neighborhood, Lidia Pacheco makes a beeline for the garbage dump. Several times a week, the 45-year-old mother of four rummages through the pungent pile to salvage the tomatoes with the least mold.

“This place saves me,” Pacheco said. Sky-high prices have forced her to stick to worn-out clothes and shoes and change her diet to the point of giving up yerba mate, Argentina’s ubiquitous national drink brewed from bitter leaves. “Whatever I earn from selling clothes goes to eating,” she said.

Argentina’s retail sales in the first quarter of 2024 fell nearly 20% compared to the year before, a clip comparable to that of the 2020 pandemic lockdowns. The consumption of beef — an Argentine classic — dropped to its lowest level in three decades this quarter, the government reported, prompting panicked editorials about a crisis in Argentina’s national psyche.

“Now I buy pork and chicken instead,” said Leonardo Buono, 51-year-old hospital worker. “It’s an intense shock, this economic adjustment.”

Milei, a self-proclaimed “anarcho-capitalist” and former TV personality, warned his policies would hurt at first.

He campaigned brandishing a chainsaw to symbolize all the cutting he would do to Argentina’s bloated state, a dramatic change from successive left-leaning Peronist governments that ran vast budget deficits financed by printing money.

Promising the pain would pay off, he slashed spending on everything from construction and cultural centers to education and energy subsidies, from soup kitchens and social programs to pensions and public companies. He has also devalued the Argentine peso by 54%, helping close the chasm between the peso’s official and black-market exchange rates but also fueling inflation.

Inflation in the first four months of 2024 surged by 65%, the government statistics agency reported Tuesday. Prices in shops and restaurants have reached levels similar to those in the U.S. and Europe.

But Argentine wages have remained stagnant or declined, with the monthly minimum wage for regulated workers just $264 as of this month, with workers in the informal economy often paid less.

Today that sum can buy scarcely more than a few nice meals at Don Julio, a famous Buenos Aires steakhouse. Nearly 60% of the country’s 46 million people now live in poverty, a 20-year high, according to a study in January by Argentina’s Catholic University.

Even as discontent appears to rise, the president’s approval ratings have remained high, around 50%, according to a survey this month by Argentine consulting firm Circuitos — possibly a result of Milei’s success blaming his predecessors for the crisis.

https://apnews.com/article/argentina-inflation-milei-single-digits-3cf0adca2cdf911fb04a06c3e9c6880d

@Jack V Savage - What you think?

 

[Jack V Savage]

https://apnews.com/article/argentina-inflation-milei-single-digits-3cf0adca2cdf911fb04a06c3e9c6880d​

@Jack V Savage - What you think?

Yeah, causing a recession can bring inflation down. Might be worth it sometimes (that's what did it in the U.S. during the '80s, and I think most people now recognize that that was the right move). Their situation is so bad that it's hard to really tell.

 

[fungi]

Argentina reports its first single-digit inflation in 6 months as markets swoon and costs hit home​

BY ISABEL DEBRE
Updated 4:55 PM BRT, May 14, 2024

BUENOS AIRES, Argentina (AP) — Argentina’s monthly inflation rate eased sharply to a single-digit rate in April for the first time in half a year, data released Tuesday showed, a closely watched indicator that bolsters President Javier Milei’s severe austerity program aimed at fixing the country’s troubled economy.

Prices rose at a rate of 8.8% last month, the Argentine government statistics agency reported, down from a monthly rate of 11% in March and well below a peak of 25% last December, when Milei became president with a mission to combat Argentina’s dizzying inflation, among the highest in the world.

“Inflation is being pulverized,” Manuel Adorni, the presidential spokesperson, posted on social media platform X after the announcement. “Its death certificate is being signed.”

Although praised by the International Monetary Fund and cheered by market watchers, Milei’s cost-cutting and deregulation campaign has, at least in the short term, squeezed families whose money has plummeted in value while the cost of nearly everything has skyrocketed. Annual inflation, the statistics agency reported Tuesday, climbed slightly to 289.4%.

“People are in pain,” said 23-year-old Augustin Perez, a supermarket worker in the suburbs of Buenos Aires who said his rent had soared by 90% since Milei deregulated the real estate market and his electricity bill had nearly tripled since the government slashed subsidies. “They say things are getting better, but how? I don’t understand.”

Milei’s social media feed in recent weeks has become a stream of good economic news: Argentine bonds posting some of the best gains among emerging markets, officials celebrating its first quarterly surplus since 2008 and the IMF announcing Monday it would release another $800 million loan — a symbolic vote of confidence in Milei’s overhaul.

People eat a free breakfast served by a soup kitchen that was set up at the Obelisk as a protest against the city government’s “hygiene and cleanliness” policy in Buenos Aires, Argentina, Tuesday, May 14, 2024. The policy involves authorities removing the homeless from the streets. (AP Photo/Gustavo Garello)

“The important thing is to score goals now,” Milei said at an event Tuesday honoring former President Carlos Menem, a divisive figure whose success driving hyperinflation down to single digits through free-market policies Milei repeatedly references. “We are beating inflation.”

Even so, some experts warn that falling inflation isn’t necessarily an economic victory — rather the symptom of a painful recession. The IMF expects Argentina’s gross domestic product to shrink by 2.8% this year.

“You’ve had a massive collapse in private spending, which explains why consumption has dropped dramatically and why inflation is also falling,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics who studies emerging markets. “People are worse off than they were before. That leads them to spend less.”

Signs of an economic slowdown are everywhere in Buenos Aires — the lines snaking outside discounted groceries, the empty seats in the city’s typically booming restaurants, the growing strikes and protests.

At an open-air market in the capital’s Liniers neighborhood, Lidia Pacheco makes a beeline for the garbage dump. Several times a week, the 45-year-old mother of four rummages through the pungent pile to salvage the tomatoes with the least mold.

“This place saves me,” Pacheco said. Sky-high prices have forced her to stick to worn-out clothes and shoes and change her diet to the point of giving up yerba mate, Argentina’s ubiquitous national drink brewed from bitter leaves. “Whatever I earn from selling clothes goes to eating,” she said.

Argentina’s retail sales in the first quarter of 2024 fell nearly 20% compared to the year before, a clip comparable to that of the 2020 pandemic lockdowns. The consumption of beef — an Argentine classic — dropped to its lowest level in three decades this quarter, the government reported, prompting panicked editorials about a crisis in Argentina’s national psyche.

“Now I buy pork and chicken instead,” said Leonardo Buono, 51-year-old hospital worker. “It’s an intense shock, this economic adjustment.”

Milei, a self-proclaimed “anarcho-capitalist” and former TV personality, warned his policies would hurt at first.

He campaigned brandishing a chainsaw to symbolize all the cutting he would do to Argentina’s bloated state, a dramatic change from successive left-leaning Peronist governments that ran vast budget deficits financed by printing money.

Promising the pain would pay off, he slashed spending on everything from construction and cultural centers to education and energy subsidies, from soup kitchens and social programs to pensions and public companies. He has also devalued the Argentine peso by 54%, helping close the chasm between the peso’s official and black-market exchange rates but also fueling inflation.

Inflation in the first four months of 2024 surged by 65%, the government statistics agency reported Tuesday. Prices in shops and restaurants have reached levels similar to those in the U.S. and Europe.

But Argentine wages have remained stagnant or declined, with the monthly minimum wage for regulated workers just $264 as of this month, with workers in the informal economy often paid less.

Today that sum can buy scarcely more than a few nice meals at Don Julio, a famous Buenos Aires steakhouse. Nearly 60% of the country’s 46 million people now live in poverty, a 20-year high, according to a study in January by Argentina’s Catholic University.

Even as discontent appears to rise, the president’s approval ratings have remained high, around 50%, according to a survey this month by Argentine consulting firm Circuitos — possibly a result of Milei’s success blaming his predecessors for the crisis.

https://apnews.com/article/argentina-inflation-milei-single-digits-3cf0adca2cdf911fb04a06c3e9c6880d

@Jack V Savage - What you think?

Leo, inflation is easily controlled by interest rates and money supply. Both managed by the Central Bank.

 

[balkanbomber85]

I went to Argentina in March, first to the north and then to the coast. Also spend a night in Buenos Aires.

Man, was worse than when I lived there in 2019-2021... so many poor people, you cannot walk into a supermarket or bank without having poor people/beggars sitting on the porch and asking for money or food.

The streets seemed diriert than they used to and I also saw much less police presence around the cities.

And last but not least, everything got more expensive, even with the favorablue dollar/euro Blu fx rate. Its still cheap if I compare it with European prices, but man, still everything got 50-100% more expensive than it used to be just 2 years back. I planned to need like 70-80USD per day in average (going out eating, shopping souvenirs, entrance fees, groceries etc) and ended up spending nearly the double.

 

[LeonardoBjj]

Leo, inflation is easily controlled by interest rates and money supply. Both managed by the Central Bank.

- Milei wanted to close the central bank.

 

[LeonardoBjj]

I went to Argentina in March, first to the north and then to the coast. Also spend a night in Buenos Aires.

Man, was worse than when I lived there in 2019-2021... so many poor people, you cannot walk into a supermarket or bank without having poor people/beggars sitting on the porch and asking for money or food.

The streets seemed diriert than they used to and I also saw much less police presence around the cities.

And last but not least, everything got more expensive, even with the favorablue dollar/euro Blu fx rate. Its still cheap if I compare it with European prices, but man, still everything got 50-100% more expensive than it used to be just 2 years back. I planned to need like 70-80USD per day in average (going out eating, shopping souvenirs, entrance fees, groceries etc) and ended up spending nearly the double.

- Theres several argentinian girls coming here. Several of them have to ressort to prostitution to survive here.

It's a great place, full of cool people, but managed by imbeciles. Imbeciles that somehow can be worst than brazilian politicians.

 

[fungi]

- Milei wanted to close the central bank.

Millei didn't want nothing. What he claimed/promised in his campaign speeches didn't mean squat.

If a country's central bank has loans from the IMF, it don't matter. The country is IMF's bitch. 4evah...

 

[GoldenWolf87]

That same IMF and their IMF funds that didn't help Greece?