by Victoria Arguello
BUENOS AIRES, Sept. 6 (Xinhua) -- Fiscal convergence, the economic policy proposed by Argentina's government for 2019, is the "only possible road to end chronic inflation and avoid stagnation," Argentine economist Nery Persichini said on Thursday.
Argentina's economy "is undergoing a painful process of reordering its macroeconomic imbalances," which will in the long run prove "beneficial," Persichini told Xinhua.
However, the process could generate "uncertainty in the short term and lead to a drop in the level of economic activity," he warned.
Among the latest steps the government has announced to counter a steep devaluation and raise revenue is a temporary tax on exports that is expected to rake in 9.15 billion U.S. dollars this year and the next.
Initially, the impact of the tax on the export industry "will not be positive," but it will eventually create the conditions to spur the sector, he said.
Right now, the exchange rate "is the most uneven it has been since the start of 2010," noted Persichini.
Though "a more competitive peso will raise the level of exports and help to balance out Argentina's current account deficit," which grew to 5 percent of GDP in 2017, "making the country very vulnerable to external shocks," he said.
Argentina's economic crisis is complex, he said, combining a volatile currency with a lack of confidence on the part of investors and eroding trust in politics.
Recently, the government signed a 50 billion dollar loan agreement with the International Monetary Fund (IMF), but soon found the original terms and disbursement schedule too tough.
Earlier this week, Economy Minister Nicolas Dujovne met with IMF officials in Washington to renegotiate the accord and move up disbursements set for 2020 and 2021 to 2019. He described the talks as "very productive."
Given the current conditions, said Persichini, "I think uncertainty will remain until there's news about the changes to the IMF agreement, and Argentina's ability to pay its debts and finance its budget."
"I think if the IMF provides the advances on the 2020 and 2021 funds, all doubts regarding financing in 2019 will be completely cleared up," he said.
The IMF is expected to announce its decision by the end of the month.
