Argentina to implement IMF cuts

Following the opening of a three-year, USD 50-billion credit line with the IMF last week, the Argentinian government has defined key cuts intended to bring stability back to the domestic economy.

“The ultimate goal of this plan is to boost economic activity, create new jobs, make it more attractive to invest in our economy, reduce poverty, improve social cohesion and raise the living standards of all Argentines,” the Ministry of Finance said in a 33-page letter of intent to the IMF.

Among the measures that Argentina will implement are reductions in energy subsidies, public works and public employment. The cuts are aimed at reducing the country’s primary fiscal deficit, which stands at 2.7% of GDP, to 1.3% in 2019.

The government also set targets for personnel spending and inflation. By the end of the three-year programme, personnel spending should be at 2.7% of GDP, down from 3.7% currently. Inflation, which stands at 27%, is projected to decline to 9% by 2021.

In the letter, the Ministry of Finance said that the plan “is solid, will help build confidence, reduce uncertainty and strengthen the economy.”