April 22, 2019 / 3:52 PM / 10 months ago

Argentine government defends price controls, says they will not harm economic reforms

BUENOS AIRES, April 22 (Reuters) - Argentine officials defended new price control measures on Monday, saying they would not damage a broader economic reform program, despite criticism by some economists that the moves went against President Mauricio Macri’s free market push.

Recession-hit Argentina last week froze prices on dozens of staple food products and public services in a bid to win back support from hard-hit consumers ahead of national elections in October. Opinion polls on the election show Macri faces a rising challenge as he seeks re-election.

“These measures tend to bring relief, to improve purchasing power and are complementary to rather than harming the medium term ... which is a program of structural reforms,” Argentine Minister of Production Dante Sica said at a press conference.

Some economists said the controls would do little to help rein in rampant inflation running at an annual rate of above 50 percent, and that it marked a shift back to more populist policies.

“In our view, price controls have generally failed in Argentina (and the world),” J.P. Morgan said in a research note after the price controls were announced.

Capital Economic had said earlier the controls suggest the government was “starting to panic ahead of October’s election and resorting to old habits to tame inflation.”

Macri, who struck a $56.3 billion deal with the International Monetary Fund (IMF) last year to help Latin America’s No. 3 economy out of crisis, has pledged to reduce government interference in markets and business.

The government separately released regulations on Monday tightening oversight of corporate behavior to ensure “loyalty and transparency,” a move seen as helping to enforce the price control measures. (Reporting by Gabriel Burin and Nicolas Misculin; Writing by Adam Jourdan; editing by Grant McCool)

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