Lagarde appears determined not to repeat the fund's earlier approach. The authorities have redesigned their monetary policy framework with strict limits on the growth in the monetary base. So, is there going to be monetary expansion? Despite the challenging environment the government has proactively strengthened its policy plans. The review just published is the first evaluation of progress under the Standby Arrangement. It also allowed European politicians to dictate initial terms in the Greek rescue, ruling out a debt restructuring that could have given Greece a fresh start. Harsh adjustment programs do not make unsustainable debt sustainable. The impressive fiscal adjustment evident since the crisis erupted is continuing.
The macroeconomic and debt outlook must remain under close review. However, progress on improving tax administration and public administration reforms needs to be started in earnest. Since most of the debt is owed to euro zone governments, it could take months before Europe decides how to proceed. After the appreciation of the currency in October, the peso has floated within the non-intervention zone. However, in the event that there is a significant overshooting of the exchange rate, the Central Bank is prepared to intervene in a limited, simple, and rules-based way. It issues its own currency, so it can simply print more of it.
There is concern about debt relief undermining the payment culture. Fund officials floated the report in the midst of crucial negotiations to make their view on debt restructuring public, even though it was at odds with their troika partners. If you have a Facebook account, become a fan and comment on our! Because the troika kept increasing its demands, Greek spending has ended up far lower — austerity has been far more intense — than anything envisaged at the beginning. Concurrently, Fed interest rate rises and a booming U. Nor is it likely, if present global trends continue. Any assessment of debt sustainability needs to be underpinned by realistic—rather than heroic—assumptions regarding future growth prospects, taking into account the reality that economies have often taken longer to recover from crises than was originally expected.
Such content may contain the views, opinions, statements, offers, and other material of the respective users, suppliers, participants, or authors. Its passage into law will be key to restoring confidence and ensuring policy continuity. They had already decided to plunge into the crisis. However, full implementation of the policies that underpin the Stand-By Arrangement, together with strong support from the international community, should allow the country to return to macroeconomic stability and fulfill its full economic potential, for the benefit of all Argentines. The opinions expressed are those of the writer. And furthermore, just as it did with Greece, it is justifying its decision to lend by producing forecasts based on wildly optimistic assumptions: Federal government debt is projected to rise to 81 percent in 2018 but start declining from 2019.
Worse, after having received more than 240 billion euros in international aid, Greece's economy is still in tatters. The Fund cannot afford a default. I guess this is based on national stereotypes, or something, because the numbers are actually awesome. The economy tanked and the Greek government failed to deliver fully on reforms, such as privatizing state assets and opening up markets. International Monetary Fund Credit Oh, and unemployment was supposed to peak a bit under 15 percent, not hit 28. The risks to the baseline make it highly likely that this program will fail.
Riquenomics, a recipe for disaster… Oct 29th, 2018 - 03:07 pm +1 Commenting for this story is now closed. The author is a Forbes contributor. International Monetary Fund Credit So how can Greece still be in debt trouble? This too would cause the peso to depreciate further. At the same time Greece borrowed 130 billion euros more from European state institutions in a second bailout. To drive through the Greek bailout, the fund bent its own rules.
But it quickly became apparent that, enormous though this financing agreement was, it would be nowhere near enough. And it shaped economic forecasts to fit political ends. Reforms to open up the economy to competition should be stepped up. The 2019 budget, which is anchored by this target, has been approved by the Lower House. This program is focused first and foremost on making debt sustainable, and to that end relies on substantial real exchange rate appreciation. The fund's powerful Managing Director, Dominique Strauss-Kahn, and a handful of his advisers, feared Greece posed a threat to the wider euro zone financial system. To achieve these goals, the authorities have redoubled their reform efforts by accelerating the reduction in the fiscal deficit to reach primary balance in 2019 and achieve a primary surplus starting in 2020.
Paris, in particular, opposed bringing in the fund. There are budget cuts and tax rises across the board. Then the unexpected intervened: As Strauss-Kahn was on his way to Europe to meet the German chancellor, he was arrested in New York after a hotel maid alleged he had sexually assaulted her. In early 2010 the Greek government's cost of borrowing soared, a crisis of confidence that threatened to infect the debt of other European nations. In 2011 New York prosecutors dropped charges against him and he reached a settlement with the maid. However, progress on improving tax administration and public administration reforms needs to be started in earnest.
It needs debt restructuring, not more loans. Substantial progress has been achieved in stabilizing the financial sector. Although good progress has been made to strengthen public financial management, improve the business climate, and reform the cocoa-coffee sector, action on other benchmarks for the financial and energy sectors fell short of program targets. They simply create misery for the population while making the debt burden even worse. We are a distributor, not a publisher, of 3rd party content. The mission's overall assessment is that the program has made a strong start.
Argentina in June 2018 may not have met these criteria, but it is hard to see that Argentina now does not. But it is still a fiscal consolidation program aiming to close the primary deficit currently 2. A drought has , widening the current account deficit and triggering a mild recession. After all, Argentina is not like Greece. And I still sing, and teach. According to the European Commission, government spending accounted for 49 percent of Greece's economic output in 2014. Has he gone to only posting on Argentina stories? But the Europeans opposed restructuring.