During a conversation at the Milken Institute, held on the eve of the 2025 Annual Meetings of the International Monetary Fund (IMF) and the World Bank, Kristalina Georgieva addressed Argentina's situation when discussing the challenges involved in maintaining fiscal discipline.
The IMF managing director praised the adjustment program implemented in the country under the government of Javier Milei and warned that its success will depend on the level of social support it manages to sustain.
“In my part of the world, in Central and Eastern Europe, we had examples of courageous leaders who did very difficult things, cut pensions and salaries by 40% or 50%, and were reelected. Why? Because they managed to get people to support them. There was trust that this had to be done”, Georgieva said.
Javier Milei y Kristalina Georgieva
The economist added: “Now we look at Argentina. Argentina is carrying out a very drastic adjustment program. Success will depend on getting people to support it”. Her statements were part of a broader reflection on how different countries have faced fiscal imbalances and the importance of clearly communicating economic decisions.
Georgieva emphasized that, in her experience, the sustainability of reforms depends directly on the trust that societies place in their leaders. She recalled again the cases of Central and Eastern Europe, where “courageous leaders did very difficult things, cut pensions and salaries by 40% or 50%, and were reelected”, which, in her view, shows that populations can support severe measures when they understand their necessity.
At this time, an Argentine delegation led by the Minister of Economy, Luis "Toto" Caputo, is in Washington negotiating the details of a financial support package that could be granted by the United States Department of the Treasury.
Javier Milei y Kristalina Georgieva
Questions for Kristalina Georgieva
During the Q&A session at the Milken Institute event, the managing director of the International Monetary Fund was also asked how governments can maintain the political support needed to implement fiscal adjustments.
Georgieva replied that one of the greatest challenges is “making people understand that an expanding deficit and higher public spending are not necessarily good for them”. She also acknowledged that an effective formula for achieving that understanding has not yet been found and admitted: “We still haven't figured out how to bring people with us in difficult decisions”.
The official also highlighted the need for governments to review the balance between revenue and expenditure with a rational rather than emotional perspective. In that regard, she stressed that decisions on tax policy must be made with sustainability and predictability criteria, avoiding measures that could undermine private sector confidence or increase economic volatility.
