Government gets disbursement lifeline after Fund board approval

The International Monetary Fund’s executive board approved a US$7.5-billion disbursement to Argentina on Wednesday, extending a financial lifeline to the cash-strapped government ahead of a tight presidential race.

The cash payments are part of a refinanced US$44-billion programme, the lender’s largest, that endured months of negotiations amid political uncertainty and wrangling over economic policy. The board decision follows a July preliminary agreement that eased some aspects of the deal, as Argentina struggled to meet its targets amid a severe drought that has battered crop exports and the economy.

The board decision completes the fifth and sixth reviews of the programme and enables immediate disbursement of the US$7.5-billion payment, according to an IMF statement. The board also approved modifications to the original programme targets and waivers of non-observance associated with some of Argentina’s recent policy measures. The next programme review will be in November, according to the IMF.

Economy Minister Sergio Massa, who has led negotiations with the fund and is also running for president, met with the IMF’s Managing Director Kristalina Georgieva at the Washington headquarters on Wednesday afternoon in Washington DC. He is expected to hold a press conference at 6pm, according to a statement from the country’s Economy Ministry.

The August disbursement will be used to pay back the IMF from a previous bailout as well as other lenders that helped Argentina make some IMF payments. Argentina has borrowed special drawing rights from Qatar, tapped a currency swap line with China, and obtained a bridge loan from a Caracas-based development bank.

Massa, the Peronist-governing coalition’s candidate, told reporters Tuesday that he did not expect the election outcome to affect the November disbursement. Javier Milei, a libertarian outsider who wants to close the Central Bank, emerged from August’s primary as the race’s likely frontrunner.

Argentines will cast ballots in the general election on October 22. The race will go to a November run-off if the leading candidate doesn’t secure more than 45 percent of the vote or win 40 percent with a 10-percentage-point lead.