Argentina

Argentina’s inflation rate galloped to its fastest pace in March since 2002, challenging a strategy by the government’s to cool prices that already lacked support from within the ruling coalition, Bloomberg News reported. Consumer prices rose 6.7% last month compared to February, the highest level since Argentina was in one of its worst economic crises 20 years ago. Inflation reached 55.1% from a year ago, the highest annual level of President Alberto Fernandez’s presidency and most since June 2019. Both results were above all forecasts among economists surveyed by Bloomberg.

Argentina’s economy contracted in January as a surge in coronavirus cases due to the omicron variant weighed on industrial manufacturing, Bloomberg News reported. Economic activity in January fell 0.5% from the prior month, better than analysts’ median estimate for a 1.0% contraction. From a year ago, the economy expanded 5.4% in the first month of the year, according to government data published Tuesday.

Argentina’s government published on Friday the detailed plan for reducing its fiscal deficit and central bank financing as part of its pending $45 billion deal with the International Monetary Fund, Bloomberg News reported. The agreement with IMF staff, announced Thursday, has now been submitted to Argentina’s congress and will go before a vote sometime in the coming weeks. The country will receive 7 billion ($9.8 billion) of the IMF’s special drawing rights upon approval by lawmakers and the executive board of the Washington-based organization, according to the document.

Argentina’s economy capped a strong second half of growth as it emerged from a long recession last year ahead of an expected new deal in the coming weeks with the International Monetary Fund, Bloomberg News reported. Economic activity in December rose 0.9% from the prior month, in line with economists’ expectations. From a year ago, the economy expanded 9.8% in the final month of the year, according to government data published Wednesday. The annual figure was below expectations for an 11% gain. In December, tourism and transportation posted the largest annual gains.

Argentina’s central bank plans to raise its benchmark interest rate by 250 basis points to 42.5% on Thursday, according to an official who asked not to be named since the announcement isn’t public yet, Reuters reported. The increase marks its second rate hike this year, further tightening monetary policy to align with goals set out in the government’s talks with the International Monetary Fund. IMF staff have called for interest rates in Argentina to exceed annual inflation running at 51% as part of a pending program to reschedule the government’s $40 billion of outstanding debt with the IMF.

The International Monetary Fund is focused on getting Argentina to make economic changes to curb runaway inflation and wants a plan to increase tax revenue and improve public spending in a staff-level agreement with the nation, Bloomberg News reported. The IMF recognizes that the program being worked out after an initial understanding was reached last week needs to have broader support from society, a lesson learned from the deal that collapsed in 2018, Managing Director Kristalina Georgieva said Thursday.

Argentina and the International Monetary Fund have reached an understanding on when the nation will achieve a balanced primary budget, marking a first key step to renegotiating more than $40 billion of debt, Bloomberg News reported. The agreement comes after talks intensified in the past week following months of delays, and Argentina plans to make a payment of more than $700 million due on Friday. The parties have agreed for the country to reach a balanced primary budget -- that is, a budget without including interest payments -- in 2025.

Argentina’s looming deadline to make a payment of over $700 million to the International Monetary Fund on Friday is exposing a growing divide within the ruling coalition, Bloomberg News reported. The public disagreements in the government of President Alberto Fernandez, with its more radical wing suggesting the country could default on the Washington-based organization, come as Economy Minister Martin Guzman leads negotiations with IMF staff for a new program to reschedule payments on over $40 billion in outstanding debt.

Argentina sharply reduced its budget deficit in 2021 as President Alberto Fernandez tries to cut down on spending amid talks with the International Monetary Fund, Bloomberg News reported. The so-called primary deficit, which excludes interest payments, fell to 3% of gross domestic product from 6.5% in 2020. The figure, boosted by proceeds from a wealth tax, was also below the economy ministry’s estimate for a 3.5% gap. Economy Minister Martin Guzman says he wants to eliminate primary fiscal deficits by 2027 as part of a deal to refinance about $40 billion owed to the IMF.

Investors have long been confident about at least one thing in wild and unpredictable Argentine markets: A big peso devaluation was coming, and the best place to take refuge was dollar-linked bonds. Now, after piling into the trade for two straight years, they are throwing in the towel, Bloomberg News reported. They were so surprised that the devaluation didn’t come in the immediate aftermath of November congressional elections -- politically, the most logical time to do it -- that they have begun to give credence to the government’s pledge that there’s no such plan in the works.