IMF relaxes Argentina’s reserves target by US$5 billion in 2025

The International Monetary Fund gave Argentina breathing room on a key benchmark after it missed the target this month, making it easier for the country to continue with its US$20-billion funding programme. 

Argentina will now need to raise net hard-currency reserves to negative US$2.6 billion by the end of this year to unlock the next tranche of IMF funds, about US$5 billion lower than the earlier target. The figure is currently at negative US$6.4 billion, in part because of a sovereign bond payment last month. 

The IMF approved a US$2-billion disbursement to Argentina Thursday after granting the country a waiver, or pardon, on the reserves accumulation target, according to an IMF staff report published late Friday. Argentina met its other targets, including its budget surplus goal, according to the report. It missed the negative US$1.1 billion benchmark for reserves by about US$3.6 billion as of June 13.

Before the IMF approved the programme in April, Argentina was already running through its reserves amid market turmoil, and the funding did little to generate inflows, according to the report. Officials also prioritised “greater price discovery and continued disinflation,” contributing to the outflows, the IMF staff said.

Reserves are now taking longer than expected to rebuild amid a widening of the current account deficit, it said.

Argentina is taking steps to fix the reserves issue, according to the staff report. These include bond issuances and block foreign exchange purchases, which have driven up reserves by US$2 billion since June. Privatisations, asset sales and concessions are also expected to bring in more greenbacks.

The IMF eased the reserves accumulation schedule after a request from Argentina. The target is only expected to get back on track by the end of 2027, when Argentina’s presidential election will also take place. The next disbursement will be available in late January at the earliest, instead of in November in the previous schedule.

Dollar bonds dropped across the curve on Friday by as much as 0.7 cents on the dollar, also pushed by a broader risk-off mood dominating global markets as US President Donald Trump shakes global trade with new tariffs. The mild move suggests that investors were already pricing in the government’s failure to meet the IMF target ahead of January debt payments.

Argentina’s economy is expected to expand about 5.5 percent this year, with inflation expected to fall to around 20 percent to 25 percent, according to the IMF.