OECD calls for greater autonomy for Argentina's central bank
Reuters - 19 Hours Ago
The OECD expects Argentina's economy to grow 2.9 percent in 2017 and 3.2 percent in 2018, according to the OECD's first economic study of Argentina in 20 years, as the South American country seeks to join the club of mostly rich countries.
"To improve the effectiveness of monetary policy, Argentina should give the central bank greater autonomy and consolidate its institutional evolution," Ramos said.
Specifically, the OECD said Argentina should only replace central bank chiefs in cases of severe bad conduct, and simplify the monetary authority's mandate to prioritize price stability.
Since taking office in December 2015, market-friendly President Mauricio Macri has sought to strengthen Argentine institutions and boost trade ties and diplomatic relations after more than a decade of leftist rule.
Previously, the central bank's board largely obeyed former President Cristina Fernandez's directives to print money to finance deficits and fork up foreign currency reserves to prop up the peso currency.
Federico Sturzenegger, the current central bank president and a Macri appointee, is trying to restore credibility and independence to monetary authority, though economists have at times accused the bank of acting politically at the expense of achieving its inflation-targeting goals.
At a press conference following the OECD's presentation of its report, Treasury Minister Chief Advisor Guido Sandleris said he did not agree with the OECD's assessment, but that Argentina may make some changes to the central bank's bylaws to "formalize" its independence.
"We think the central bank is independent," Sandleris said. "We think there has been enormous progress."
A central bank spokesman did not immediately respond to a request for comment.
In its report, the OECD said it expected Argentina's inflation to be 21.8 percent in 2017 and 14.3 percent in 2018, above the central bank's target ranges of 12 percent to 17 percent and 8 percent to 12 percent, respectively.
The OECD added that it expects Argentina to post a primary budget deficit of 4.2 percent of GDP in 2017, in line with government projections, and a 3.4 percent primary budget deficit in 2018, slightly above the government target of 3.2 percent. (Reporting by Maxiliano Rizzi, Walter Bianchi and Luc Cohen; Editing by Jeffrey Benkoe and Paul Simao)