The crisis continues to hit Argentina hard. Inflation, which in 2022 had reached a 32-year high of 94.8%, started 2023 under bad auspices, with an increase of 6.6% in February, 13.1% since the start of the year. , breaking the symbolic threshold of 100% year-on-year.
The February index, published on Tuesday by the National Institute of Statistics (Indec), confirms that the deceleration observed in the last months of 2022 was a short-lived respite. Expressed over the last 12 months, the price increase is 102.5%, and the government’s projection of 60% for 2023, on which it based its budget.
High inflation for 12 years
Latin America’s third-largest economy continues to grapple with chronic double-digit inflation for 12 years, with multiple causes, both internal (recurrent budget deficits, large-scale inflationary expectations) and external (impact of the war in Ukraine, drought affecting agri-food), which hinder a post-Covid economic recovery. Growth for 2022 stood at 5.2%, after 10.3% in 2021. A rebound – two consecutive years of growth – unprecedented since 2010-2011, which came after three years of recession.
On Monday, the International Monetary Fund (IMF) announced that it had reached an agreement with the Argentine government as part of the follow-up to the existing aid program, paving the way for a new disbursement of 5.3 billion dollars. This 30-month program should provide total aid of $44 billion, refinancing Argentina’s debt inherited from a loan taken out in 2018 with the Fund.
The IMF has also commended “prudent macroeconomic management (by the Argentine government) in the second half of 2022 which has supported financial stability and made it possible to meet the objectives set out in the program”. But he called for “a package of stronger measures (…) necessary in order to maintain macroeconomic stability, remedy rising inflation”. Delicate measures for the center-left government in the run-up to general elections in October.