Argentina's Economy to Rebound in Second Half, Prat-Gay Says

  • First three months of Macri govt about putting house in order
  • Holdouts bill shows Macri's ability to govern with minority

Argentina’s economy will rebound and inflation will slow in the second half of the year after President Mauricio Macri’s government completes a program to lift restrictions and invests in infrastructure, Finance Minister Alfonso Prat-Gay said.

The government’s targets of reducing the fiscal deficit by one percentage point and reining in inflation to between 20 percent and 25 percent is achievable, Prat-Gay said at an event organized by U.S. Chamber of Commerce in Argentina to coincide with U.S. President Barack Obama’s visit to the country.

Since taking office in December, Macri has lifted currency controls, eliminated most export tariffs on agricultural products and is on the cusp of sealing an agreement to end a decade-long legal battle with disgruntled creditors that has restricted access to international credit markets. The first three months of the year have been about “putting the house in order” in order to get Argentina to the “starting gates”, Prat-Gay said while urging local investors to show confidence in the government by investing in the country.

“In the first half (of the year) we’re ordering things,” Prat-Gay said. “In the second half growth will reappear, inflation will slow and we’ll have a more orderly situation with confidence and the ability to incorporate large investment projects while looking at the long-term.”

A bill that proposes an accord to pay holdout creditors from the 2001 default still needs approval from the senate after the lower house earlier this month voted in favor and shows Macri’s ability to govern even though his alliance is a minority in both houses, Prat-Gay said.

The government focus is now on slowing inflation of about 30 percent because of the social impact it has, Prat-Gay said.