IMF’s Lagarde: Argentina would be ‘foolish’ to abandon reforms

The crisis-hit South American giant, which has had a fractious relationship with the IMF over the years, has been trying to stabilize its economy with the help of an IMF-funded aid package, and will face presidential elections in late October.

“We are now beginning to see the program actually work,” Lagarde told reporters at the start of the IMF-World Bank spring meeting.

“Our assessment is that the Argentine economy is at the point where it is going to bottom out.”

The IMF projects Argentina’s economy will contract by 1.2 percent this year but will begin to grow in the second half of the year and that will be followed by an expansion of 2.2 percent in 2020.

“Now that so much hard work has been done, in a program where social protection has always been one of our three key priorities, it would be foolish on the part of any candidate to turn their back to the work that is underway,” Lagarde said.

Argentina originally secured a $50 billion financing package from the IMF in June before returning to the fund to ask for more in October. The IMF granted an extra $6 billion and accelerated disbursements in exchange for tougher conditions.

The government statistics bureau said the economy contracted 3.5 percent in the third quarter of 2018, following a four percent drop in the second quarter, and plunged 7.5 percent in November alone.