Latin America Advisor

Alberto Ramos, managing director and head of Latin America economic research at Goldman Sachs in New York: “Investors have been waiting and hoping for a new IMF program since Argentina’s last debt restructuring operation in August 2020. After 18 months of inconclusive talks the authorities and the IMF appear to still be far apart on a core policy platform that could underpin a new program. The authorities are keen on achieving budget balance only by 2027, while preserving central bank funding of the budget for another five years. This is an extremely gradual, risky and most likely unsustainable proposition. The current model of funding the budget through heavy central bank monetization, rising central bank local currency liabilities and a loss of reserves has very limited longevity. The IMF would like to see faster fiscal consolidation backed up by credible measures and other fiscal and monetary actions to rebalance the economy and ease some of the current micro and macro distortions. Reaching an agreement with the IMF remains an open issue with a difficult and uncertain…”