Argentina inflation seen at 142pc this year, govt targets $44bn loan renegotiation with IMF
Business
Latin America's third-biggest economy has also been strained by a historic drought
BUENOS AIRES (Reuters) – Expectations for galloping consumer prices in Argentina remain solidly in triple-digit territory, a monthly analyst poll showed on Friday, though the forecast edged down slightly compared with last month's survey.
Analysts polled by the South American country's central bank forecast annual inflation this year at 142.4 per cent, below the 148.9pc seen in the bank's previous poll.
Sky-high inflation has hammered Argentina's slumping economy, as the ranks of the poor swell and the peso currency steadily weakens.
For June, the analysts polled expect prices to have risen 7.3pc in the month. Monthly inflation in May clocked in at 7.8pc, according to the national statistics agency.
By 2024, the analysts see the annual rate of rising consumer prices edging down to 105pc.
Latin America's third-biggest economy has also been strained by a historic drought that has worsened an ongoing currency crisis. Economic activity is expected to shrink 3pc in 2023 from 2022, the survey found.
Read more: Inflation and interest rates: El Nino will brew up potent new economic storm
Analysts see the Argentine peso, currently officially valued at 261 pesos per US dollar, ending this year at around 408 units per greenback, and 2024 at 904 pesos per dollar.
The central bank surveyed 39 participants from June 28-30.
Rising prices and tumbling foreign reserves pose an especially stiff challenge for Argentina's left-leaning government, ahead of general elections in October.
IMF talks
The Argentine government will send a delegation next week to Washington in a bid to finalise the renegotiation of its $44 billion loan with the International Monetary Fund (IMF), a source involved in the talks told Reuters on Friday.
The delegation had initially planned to travel as early as June.
Argentina intends to change the scheduling of disbursements set for the rest of the year amid soaring inflation, a weakening peso, and a historic drought that has hindered agriculture exports and diminished central bank dollar reserves.
"The negotiation is fine, next week our team will be there (in Washington) all week. We are very close (to an agreement)," the source said on the condition of anonymity.
The fund said through a spokesperson that current discussions are focused on support for reserves accumulation and improving fiscal stability "while recognizing the impact of the drought."
Grupo SBS said in a note that the renegotiation with the IMF rests on changing the exchange rate through a currency devaluation, but that "the government continues to refuse."
In June, Argentina was forced to pay the IMF $2.7bn in debt using the last reserves of its Special Drawing Rights (SDRs) and a Chinese yuan currency swap so as not to weaken its US dollar reserves.
The government also this week postponed its $2.6 billion loan repayments for July until the end of the month, which include $1.3 billion that were due Friday.
Argentines in August will vote in a primary nominating contest, ahead of the general election in October.
