Thursday, May 23, 2024

ECONOMY | 09-06-2022 00:34

Argentina clears first review as IMF paves way for US$4-billion in funds

IMF confirms it has reached a staff-level agreement with Argentina that will unlock US$4.03 billion in funding; Multilateral lender says government “met all qualitative targets in first quarter."

The International Monetary Fund announced Wednesday that it had reached a staff-level agreement with Argentina on the first review of its massive loan package, paving the way for the country to access some US$4.03 billion.

"The [staff-level] agreement is subject to approval by the IMF Executive Board, which is expected to discuss it in the coming weeks," said Julie Kozack, deputy director of the IMF's Western Hemisphere Department. 

"Upon completion of the review, Argentina would have access to about US$4.03 billion," she added.

Kozack and IMF mission chief for Argentina Luis Cubeddu praised Argentina’s performance so far, with the former noting that "all quantitative targets in the first quarter of 2022 were met."

The country had also made progress on "the structural agenda and growth-enhancing reforms in line with programme commitments, including on the energy front," she added.

Despite shocks due to Russia's invasion of Ukraine, the IMF said it had agreed with President Alberto Fernández’s government that the "annual objectives established at approval of the arrangement will remain unchanged," especially those relating to the primary fiscal deficit, monetary financing and net international reserves. 

"Such an approach provides a vital anchor for economic stability and growth in times of uncertainty," Kozack said, adding that the government’s “commitment to implementing additional policy measures to achieve these annual objectives is welcome."

These would include actions to reduce tax evasion, strengthen anti-money laundering and anti-terrorist financing operations, and encourage investment in strategic sectors, among others policies.

External shocks would only have “a limited impact” on Argentina’s growth and balance of payments issues, said the IMF official.

The multilateral lender did warn, however, that rising global commodity prices were already having an impact on inflation in Argentina, as in most nations.

Prices rose by six percent in April, with inflation now running at 58 percent over the last 12 months – one of the highest rates in the world.

The multilateral lender agreed a new financing deal with President Alberto Fernández's government earlier this year that restructured Argentina's remaining debt to the Fund from the record US$57-billion stand-by loan granted to the Mauricio Macri administration in 2018.

On March 25, the IMF’s board approved a 30-month credit programme, with an immediate disbursement of US$9.656 billion. 

Under the deal struck in March – the 13th that Buenos Aires has signed with the IMF since the return of democracy in 1983 – repayments will be made from 2026 to 2034 after a grace period.



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