IMF praises Argentina reforms amid first meetings in a decade

September 29, 2016 11:32 AM EDT

Argentine President Mauricio Macri speaks during news conference at the Olivos presidential residence in Buenos Aires, Argentina, September 28, 2016. REUTERS/Marcos Brindicci

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By Maximiliano Rizzi

BUENOS AIRES (Reuters) - An official at the International Monetary Fund (IMF) on Thursday praised ongoing reforms in Argentina, hours before concluding the fund's first consultation in a decade in Latin America's third-largest economy.

The visit from IMF officials comes as President Mauricio Macri, who took office in December, throws open Argentina's economy to investors after 12 years of leftist rule and isolation from capital markets.

"The changes to the macroeconomic, regulatory and business environment clearly have the characteristics to boost investments," Alejandro Werner, director of the IMF's Western Hemisphere Department, said in a conference in Buenos Aires.

He said the investments would come "slowly, as has been the international experience, but in significant magnitude in coming years."

Werner is scheduled to meet with Argentina's finance minister later, concluding a technical mission that started last week.

The IMF last held a so-called Article IV consultation, normally annual affairs for IMF members, in Argentina in July 2006. It has closely followed a revamp of Argentina's statistics agency after declaring data under former president Cristina Fernandez unreliable.

The IMF said in August it would likely lift its censure on Argentina's data this year after changes were made in the way gross domestic product and inflation are measured.

Macri still has many challenges to confront, with Argentina's economy mired in recession and facing double-digit annual inflation. The government earlier this month proposed a higher-than-promised fiscal deficit in the 2017 budget and on Wednesday said nearly a third of Argentines live below the poverty line.

Still, the IMF will likely be positive when it releases a formal report on Argentina later this year, cognizant of the political sensitivity of its visit. Many Argentines share the previous government's opinion that the IMF was at least partly responsible for the economic crisis following its 2001 default.

"We do not need to pay attention to the IMF, but we have no reason to hide the numbers from them either," Finance Minister Alfonso Prat-Gay said recently, according to state-run news agency Telam.

Werner reiterated the IMF's expectations for a contraction of 0.4 percent in Latin American economies in 2016 and growth of 1.6 percent in 2017.

Argentina's government expects the economy to contract 1.5 percent in 2016 and grow 3.5 percent in 2017.

"We agree with the vision presented ... about the recovery that is coming in the final months of this year, and obviously, above all next year," Werner told journalists.

(Additional reporting and writing by Caroline Stauffer; Editing by Meredith Mazzilli)

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