IMF urges Argentine President Milei to safeguard poor people

The International Monetary Fund (IMF) has called upon Argentine President Javier Milei to prioritize the protection of the nation’s impoverished citizens as he aggressively pursues austerity measures aimed at slashing government spending.

While the IMF commended Milei’s government for its commitment to rectifying years of fiscal overspending, the drastic austerity measures implemented by the libertarian president have triggered widespread strikes and mounting concerns about escalating hunger among the population.

Deputy Managing Director of the IMF, Gita Gopinath, emphasized the necessity for calibrated austerity measures, ensuring that social assistance remains intact and that the most vulnerable segments of society are not disproportionately burdened. Speaking to La Nacion newspaper, Gopinath stressed the importance of balancing fiscal responsibility with social support.

Gopinath recently visited Buenos Aires to assess Argentina’s $44 billion credit program. During her visit, she engaged with President Milei, members of his government, economists, union leaders, and civil society organizations. The discussions revolved around the ramifications of the stringent economic policies implemented since Milei assumed office in December.

Milei’s governance has witnessed a series of bold moves, including a more than 50 percent devaluation of the peso, a significant reduction in public sector jobs, and a halving of the government’s size. Additionally, he eliminated state transport and energy subsidies, freezing aid to 38,000 soup kitchens pending an audit, exacerbating the plight of the poor, particularly in the face of an alarming 254 percent annual inflation rate.

Gopinath acknowledged the economic challenges inherited by Milei’s administration, stating, “The economy that this government inherited was close to a crisis, and required bold and decisive action to move it away from the precipice.” However, she emphasized the need for additional social measures to prevent the fiscal burden from disproportionately affecting the vulnerable.

Addressing concerns about inflation, Gopinath forecasted a decline from the current 20 percent in January to single digits by mid-2024. Nevertheless, she cautioned that sustaining these lower levels until 2025 would demand ongoing efforts.

From the IMF’s perspective, Gopinath emphasized the critical importance of government investment in human capital. She expressed deep concern about child poverty rates exceeding 55 percent and stressed the need to significantly reduce this percentage through increased investment in education. Looking ahead, the international community will be closely watching Argentina’s economic trajectory as it grapples with the delicate balance between fiscal responsibility and social welfare.