Politics Complicate an Already Complex Economic Situation

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Politics Complicate an Already Complex Economic Situation

May 2022

The IMF program triggered a conflict within the government coalition between the populist and more “orthodox” sectors. The key differences are the importance that each of then attach to the targets set in the IMF program. Targets require tighter monetary and fiscal policy, and the difference in the approach to deal with inflation, where the most radicalized sectors put the priority on price controls and on limiting the increases in utility rates while others put more emphasis on the fiscal imbalance, on reducing energy subsidies and on a more prudent monetary policy.