The Central Bank of Argentina published a presentation delivered by Vice President Vladimir Werning at the 11th BBVA Latin America Conference in London outlining “Stage 3” of Argentina’s economic programme, centred on using internal stability through lower monetary stocks and fiscal balance to build external flexibility through higher foreign currency reserves and a balanced balance of payments. The presentation reviewed the decline in inflation expectations and set out priorities including exiting exchange controls and implementing “monetary competition.” Werning attributed the shift in inflation dynamics to rapid implementation of fiscal, monetary and exchange rate policies that helped avoid hyperinflation, with public perceptions, analyst forecasts and market pricing described as pointing to continued disinflation. The policy “anchors” highlighted were fiscal tightening to restrict demand, eliminate peso financing and sterilise balance of payments flows; monetary actions to reduce peso stocks and flows, cut contingencies and maintain positive real interest rates; exchange rate policy to realign relative prices and reduce inertia and indexation via crawling; and incomes policy to reduce inefficient subsidies on regulated prices while increasing direct transfers through social programmes. The presentation also cited real-economy effects including an economy “already taking off” and falling poverty, and stated that the Central Bank’s reserves were in line with targets after adjusting for one fewer International Monetary Fund disbursement and an early bond repayment. On next steps, the presentation positioned the exit from exchange controls as dependent on conditions including inflation inertia and the level of Central Bank reserves, alongside the speed of exchange-rate pass-through and broader flexibility in relative prices. It also pointed to expected support for the current account from capital account inflows such as corporate issuance and household repatriation, and flagged distortions in relative prices where “abnormal” margins, taxes and regulations were contrasted with “normal” wage levels.
Central Bank of Argentina 2025-01-21
Central Bank of Argentina vice president presents Stage 3 economic programme and conditions for lifting exchange controls
Argentina's Central Bank Vice President, Vladimir Werning, detailed "Stage 3" of the economic programme at the BBVA Latin America Conference, emphasizing internal stability and external flexibility. Priorities include exiting exchange controls, implementing "monetary competition," and maintaining positive real interest rates. The presentation highlighted fiscal, monetary, and exchange rate policies that have shifted inflation dynamics and supported economic growth, with reserves aligning with targets despite fewer IMF disbursements.