Inflation Soars Again in Argentina

  • The 2020 budget, passed before Argentines go to the polls on October 27, is moderately optimistic about the future control of inflation.
  • “Our engagement remains strong with Argentina," said Gerry Rice, a spokesman with the IMF.
  • In the Chamber of Deputies, the government and opposition agreed on Thursday to unanimously approve an urgent bill on the food emergency in the country.

Prices rose 4% in August, as a result of the devaluation suffered by the Peso a month ago, and year-on-year inflation stood at 54.5%. The data is more serious when it comes to food, which increased by 4.5%. Shortly before the National Statistics Institute released the data, the Chamber of Deputies approved a declaration of food emergency that meant a 50% increase in the budget.

The peso is the currency of Argentina, identified by the symbol $ preceding the amount in the same way as many countries using dollar currencies. It is subdivided into 100 centavos. Its ISO 4217 code is ARS. Since the late 20th century, the Argentine peso has experienced a substantial rate of devaluation, reaching 25% year-on-year inflation rate in 2017.

The 2020 budget, passed before Argentines go to the polls on October 27, is moderately optimistic about the future control of inflation. It considers that the current increase will be temporary and estimates that next year the price increase will be reduced to 34%, a figure still very high, but far from the current one. Argentina, however, will remain in recession.

The Gross Domestic Product should grow in 2020, according to the draft budget, by 1% (at the end of 2019, the contraction will be around 2.6%). Even the technocrats of the Ministry of Finance, however, admit that a close descent is more likely 1%, given the circumstances created by the devaluation after the August primary elections, the implementation of controls on the purchase, and sale of currencies.

Hours before the August inflation figure was known, a spokesman for the International Monetary Fund, Gerry Rice, said the outlook was unclear: “Our engagement remains strong with Argentina. The IMF’s objective has been to try and help the authorities stabilize the challenging situation and allow for a return of confidence that would pave the way for growth,” Rice told news reporters.

He added that, at least until June, Argentina “had not broken the rules.” He did not say, however, whether or not the IMF would disburse the $5.4 billion corresponding to September in the $57 billion loans granted in 2018. Argentine Finance Minister Hernan Lacunza will travel to Washington at the end of the month to try to unlock the disbursement.

General elections will be held in Argentina on 27 October 2019, to elect the president of Argentina, members of the national congress and the governors of most provinces. Conservative, pro-market incumbent President Mauricio Macri is running for re-election against Peronist former cabinet minister Alberto Fernández.

In the Chamber of Deputies, the government and opposition agreed on Thursday to unanimously approve an urgent bill on the food emergency in the country. The deputies of the ruling coalition supported the text presented by the Peronists, although they said they did not agree with the opposition as to “the magnitude of the situation being experienced.”

The vice-presidential candidate with Mauricio Macri, Miguel Ángel Pichetto, said Wednesday in an interview that many Argentine families “are finding it harder to make ends meet.” He added, “where this situation strikes most clearly is at the table of Argentines, which is the most important thing for the family.”

Deputy Hector Flores recalled that the Social Emergency Declaration, formulated after the collapse of 2002, was still in force and that in 18 years the problem of structural poverty had not been resolved. “There was a social emergency when the economy did not grow and there was a social emergency when we grew,” he said, referring to the years of Kirchner government. The text approved in the House, which will now be passed to the Senate, represents a 50% increase in budget allocations for free dining rooms.

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George Mtimba

George clarifies how the news is changing the world, how world news trends affect you. Also, George is a professional journalist, a freelance news reporter and writer who is passionate with current world news.


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