In June, the International Monetary Fund agreed to loan Argentina US $50 billion in the face of a sharply declining peso due to a recent exodus of investors from the domestic market. As part of the deal, the Macri administration agreed to accelerate the already existing plans to reduce the country’s fiscal deficit.
Now, six months into the year, the Ministry of Finance reported that the country ended its second fiscal quarter with a deficit of 0.8 percent of the GDP, exceeding the goal of 1.1 percent. It is the hope of the Argentine government that the loan will help the country avoid a financial crisis similar to those of the past, and strengthen the peso against the dollar.
Tomorrow, Christine Lagarde—the current head of the IMF— is scheduled to land in Buenos Aires and have dinner with Macri in Olivos. Also present at the dinner will be Macri’s economic team, including Marcos Peña, the Chief of Staff, Nicolás Dujovne, Argentina’s Minister of Finance, and Luis Caputo, the new President of the Central Bank.
Lagarde is expected to arrive accompanied by her deputy, David Lipton, and the director of the IMF’s Western Hemisphere department, Alejandro Werner. Also traveling with Lagarde will be Roberto Cardarelli, the IMF economist in charge of following up on Argentina and the state of the US $50 billion loan.
The formal purpose of Lagarde’s trip to Buenos Aires is to prepare for the upcoming G20 meeting in Argentina’s capital. However, Lagarde and Macri are also set to discuss both the loan and the current chaotic state of Argentina’s economy, including the plunging peso and skyrocketing inflation rates.
It is the first time since the deal was made between the IMF and Argentina that Lagarde, along with the two main economists who negotiated the loan with the Macri administration, will visit the country. Argentina’s recession and inflation, which last month were recorded at their highest levels in the last two years, are expected to be discussed at length at the meeting.
The trip, however, is not without its controversies. After all, the deal between the Argentine government and the IMF was received with a great deal of contention in Argentina— leading the country’s biggest union, the General Confederation of Labour (CGT), to hold a general strike on June 25th. While Lagarde and her team are thus set to receive a warm welcome by the Macri administration, they are also expected to face a hostile reception from members of the political opposition, unions and social organizations.