Argentina's last-ditch effort to secure International Monetary Fund cash with measures that will weaken the peso risks pushing triple-digit inflation even higher and angering voters just three months before national elections.
Economists said steps unveiled on Monday by Economy Minister Sergio Massa, himself a presidential hopeful, were unlikely to dampen"The government was pointing at the two slight declines in monthly inflation as a sign of success, but that is likely to change," said Buenos Aires-based economist Eduardo Levy Yeyati.
With some 40% of the population plunged below the poverty line by an economic crisis that has worsened over the past year, the cost of living will be a key issue for voters in polls which start with presidential primaries on Aug. 13. It needs the money to repay $3.4 billion in July and August on an IMF loan approved in 2022 to refinance a failed 2018 program with the Washington-based lender. If it cannot secure fresh funds before an approaching deadline, Argentina risks defaulting on repayments to the IMF.Tension between Buenos Aires and the Fund has been building as Argentina repeatedly fails to meet targets set out in the loan program, including narrowing the fiscal deficit and the accumulation of central bank reserves.
The left-wing administration has been locked in negotiations with the IMF for months over whether to front-load tranches of the $44 billion program. Both parties said on Sunday that an agreement on the fifth IMF review was close, but not yet finalized.
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