The World Bank said the war will generate more inflation and less growth in Argentina: it suggested improving the efficiency of social and energy spending

William Maloney
William Maloney

The World Bank has said that Argentina will have more inflation and less economic growth following the Russian invasion of Ukraine and, furthermore, it has made clear that it is working with the government to improve the efficiency of public spending on social programs and energy policies in the country. .

In a virtual press conference, World Bank for Latin America chief economist William Maloney said when asked Infobae about Argentina that “The war in Ukraine will increase inflationary pressure and reduce economic growth around the world. Fighting this phenomenon will lead to greater complexity in terms of budget rationalization and more restrictive monetary policies “.

“Argentina had a very good year in 2021, above our forecast, 10.3%, and we now expect growth of 3.6% in 2022 and 2.25% in 2023.; this forecast is above market forecasts, ”Maloney said.

“All the countries of Latin America have had very high growth rates in 2021, recovering what was lost in 2020 and now we are seeing more normal rates”, he specified.

The war in Ukraine will increase inflationary pressure and reduce economic growth (William Maloney)

Furthermore, he confirmed it “The bank has been collaborating with Argentina for many years to improve the efficiency of energy and social spending”.

About social programs we focus on continuing to support many programs for those sectors that should be most protected ”, as well as supporting the AUH program.

“In the energy sector we are working at national and provincial level to improve efficiency and we will continue to do so, especially when the issue of energy security becomes more important.“, has indicated.

In particular, he said so the increase in the global price of energy due to the conflict in Europe will “put greater pressure on the country’s budget”.

This work It coordinates with the staff of the International Monetary Fund (IMF), in view of the new debt refinancing program signed by the country. Indeed, the IMF staff report indicated that “a medium-term plan is being prepared, with the technical assistance of the World Bank, to develop concrete actions to: (i) reduce metering, billing and payment inefficiencies; (improve the efficiency of improving the efficiency of energy consumption and conservation; strengthen the quality of the energy service “:

In particular, it will seem “Improve the targeting of energy subsidies. This medium-term plan, which will be made public at the end of September 2022 (structural reference), will be based on clear cost recovery objectives “, according to the IMF.

While, Maloney said the region wastes around 4.4% of its GDP due to inefficient execution of its budgets. In addition, he pointed out that the region is growing less than the rest of the world, with little diversification, low productivity and little use of free trade agreements, which results in a lower export rate than other areas.

World Bank President David Malpass REUTERS / Yves Herman / file photo
World Bank President David Malpass REUTERS / Yves Herman / file photo

Maloney filed the complaintConsolidating the recovery: exploiting the opportunities of green growth ”, in which he highlighted this “La the economies of Latin America and the Caribbean (ALC) are recovering after the COVID-19 crisis, although the consequences of the pandemic persist and the need for dynamic, inclusive and sustainable growth is increasingly urgent“.

After a rebound of 6.9% in 2021, the region’s GDP is expected to grow 2.3% this year and a further 2.2% in 2023.leading most countries to reverse the GDP losses that occurred during the pandemic crisis “, said the entity that chairs David Malpass.

“However, these modest projections place regional growth among the lowest in the world at a time when the region faces great uncertainties, such as the possible emergence of new coronavirus variants, an increase in inflationary pressure and the war in Europe. , which threatens global recovery. In fact, the regional growth forecast was revised down by 0.4 percent after the Russian invasion of Ukraine ”, he clarified.

Instead, “On the bright side, the vaccination process has spread to the region, companies are resuming hiring and schools are reopening their doors. In any case, the long-term consequences of the crisis persist and require attention. The regional poverty rate rose to 27.5% in 2021 and remains above the pre-pandemic level of 25.6%.while learning losses could lead to a 10% reduction in future earnings for millions of school-age young people ”.

Structural reforms

“To avoid a return to the low growth rates of the 2010s, the countries of the region must implement a long overdue series of structural reforms and take advantage of the opportunities offered by an increasingly greener world economy.”

“We are in a global environment of great uncertainty, which could have an impact on the post-pandemic recovery. However, in the long run, the challenges of climate change will be even more pressing, forcing us to urgently move towards a greener, more inclusive and productivity-enhancing growth agenda.She said Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.

According to the report, “it is imperative to put in place a series of reforms in favor of the growth of infrastructure, education and innovation, and the most important investments must be financed through more efficient spending and higher tax revenues. But these much-needed reforms must respond to the major events that are shaping the world economy, including climate change ”.

The bank supports social programs in the country.  REUTERS / Agustin Marcarian
The bank supports social programs in the country. REUTERS / Agustin Marcarian

“Over the past two decades, the report points out, countries in Latin America and the Caribbean have lost the equivalent of 1.7 percent of their annual GDP due to climate-related disasters, while some 5.8 million of people could fall into extreme poverty in the 2030 region. Agriculture is likely to be severely impacted, with crop yields reduced in nearly all countries, while the stability of energy production will be affected by changes in the hydrological cycle.

The report raises a mix of policies that can help exploit the opportunities offered by green growth, They include “pricing measures that promote the adoption of current low-carbon technologies, for example through reforms of fossil fuel subsidies and the establishment of carbon taxes and emissions trading schemes.” Furthermore, “credible verification mechanisms that make green price rewards possible. This will enable the export of carbon credits / offsets and leverage green financial markets and improved systems to identify and adopt technologies that mitigate the region’s climate impact and help it adapt, while harnessing its natural benefits to grow. ”, He concluded.

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