## 1argea2026001 ## Source details **Canonical URL:** [1argea2026001](https://www.imf.org/-/media/files/publications/cr/2026/english/1argea2026001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2026/english/1argea2026001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2026/english/1argea2026001.pdf.json) --- ### Executive Summary — Context and Recent Developments - Authorities continue to make progress in stabilizing the economy, although political uncertainties during 2025 temporarily slowed growth and the disinflation process. - Stability underpinned by a strong fiscal anchor and refinements to the monetary and FX framework; Argentina now a net energy exporter. - Improved governance capacity since the October midterm elections enabled approval of: the 2026 Budget, the Fiscal Innocence Law, and the Labor Modernization Law. - Deregulation and opening measures continued, including free trade agreements with the United States and the European Union, contributing to a recent credit rating upgrade (Fitch upgraded Argentina’s credit rating to B- from CCC+). ### Program Performance (through end-2025) and IMF Actions - Mixed performance: - End-2025 fiscal targets were met. - Net international reserves (NIR) accumulation target was missed; at program exchange rates, NIR fell US$10 billion below the floor (end-December QPC: Not met). - Subsequent monetary and FX adjustments, including a daily reserve purchase program, led the BCRA to purchase around US$7.5 billion since the start of 2026 (supplement notes purchases exceeding US$8 billion year-to-date in May). - Most structural benchmarks were met; two delayed for technical reasons. - IMF Executive Board actions: - Completed the second review of Argentina’s 48‑month Extended Fund Facility (EFF) arrangement and concluded the 2026 Article IV consultation. - Decision unlocks about US$1 billion (SDR 0.8 billion) under Argentina’s US$20 billion (SDR 15.267 billion) EFF arrangement approved on April 11, 2025 (479 percent of quota). - Decision enables immediate disbursement of about US$1 billion (SDR 0.8 billion), bringing total disbursements under the arrangement to about US$15.8 billion (SDR 11.452 billion). ### Outlook and Key Risks - Baseline projections: - Economy projected to expand by about 3½ percent in 2026. - End-of-period inflation projected to fall to around 25.0 percent in 2026. - Current account deficit expected to narrow somewhat in 2026; NIR expected to increase by at least US$8 billion in 2026 (program objective). - Capital inflows expected to recover, driven by FDI and more stable market access. - Near-term risks: - Tighter global financial conditions from heightened geopolitical tensions (war in the Middle East) and political uncertainties ahead of the 2027 Presidential elections could weigh on program implementation. - Medium-term risk: - Safeguarding external sustainability will require careful management of the expected rapid expansion of primary sectors. ### Policy Priorities — Overarching Objective - Maintain stability by balancing disinflation, external sustainability, and growth, complemented by structural reforms to boost productivity, investment, and formal employment. ### Fiscal Policy — Findings and Recommendations - Target an overall fiscal balance; sustain fiscal anchor. - Restrain spending by: - Rationalizing subsidies. - Better targeting social assistance. - Prioritizing infrastructure spending. - Further reform tax, pension, and fiscal frameworks to strengthen the durability of the fiscal anchor and debt sustainability over the medium term. - Near-term fiscal numbers and assumptions: - Primary fiscal balance: 2024 1.8; 2025 1.4; 2026 1.4 (Proj). - Federal government revenues: 2024 16.8; 2025 15.9; 2026 15.5 (Proj). - Primary expenditure: 2024 15.0; 2025 14.6; 2026 14.1 (Proj). - Authorities will maintain a zero overall cash fiscal balance target and aim for a federal primary surplus of about 1½ percent of GDP in 2026. ### Financing Policies and Debt Management - Multipronged financing approach to meet near-term obligations: - Increased access to local capital markets. - Asset sales (SOE sales noted: Transener sale US$365 million; AySA tender expected ~US$500 million). - Central bank repos (US$3 billion thus far). - Commercial loans guaranteed by other official creditors. - Work to secure timely and sustained access to international capital markets and reduce Fund exposure. - Key debt and financing figures and projections: - Gross federal debt (DSA perimeter) entries: 367.9 478.7 466.2 154.6 84.7 80.3 -12.5 (table values presented). - Consolidated public sector debt (5=2+4) for 2025: 111.1 percent of GDP context; consolidated public sector debt projected to fall from around 52 percent of GDP in 2025 to below 30 percent of GDP by 2031. - FX debt service (US$ bn): 2026 Total FX debt service 24.8; 2027 32.3; Total 57.1. Principal 2026 15.6; 2027 23.3; Total 38.9. Interest 2026 9.1; 2027 9.0; Total 18.2. - Projected gross financing assumptions: Foreign-law FX bond issuance and syndicated loans — Issuance (USD billions): 5.4 8.0 10.0 12.0 12.0 12.0 (2026–2031 as table shows); Spread (basis points): 500 450 400 350 350 350; Maturity (years): 7 (each year). ### Monetary and FX Policy — Strategy and Operational Changes - Commit to rebuilding reserves in line with agreed targets and expected re-monetization of the economy. - Monetary policy to focus on supporting disinflation consistent with targeted expansion of monetary aggregates; keep NDA generally unchanged (near-term deviations possible). - Further enhancements to the framework to contain interest rate volatility; publish quarterly monetary policy reports. - Exchange rate to move flexibly within a widening band; FX sales limited to episodes of excessive volatility. - BCRA actions and balance sheet: - Daily reserve purchase program led to cumulative FX purchases since start-2026 of around US$7.5 billion (source text) and purchases exceeding US$8 billion year-to-date in May (supplement). - BCRA concluded repo agreements totaling US$6 billion with international banks (US$3 billion in January 2026). - October 2025 swap agreement with U.S. Treasury under the ESF for US$20 billion (activated portion repaid using a BIS swap expected to be repaid by end-2026). - Net FX position: net FX reserves excluding the new IMF program currently around negative US$10 billion; FX assets around US$45 billion; short-term liabilities include regulatory deposits of banks US$18 billion and swaps with the PBoC and BIS about US$20 billion. - Operational refinements: - Added a liquidity facility for banks. - Lowered banks’ daily reserve requirement from 100 to 65 percent (recent changes cited 75 to 65 percent and other passages). - Use most profit distributions to the Treasury to recapitalize the central bank; transition to IFRS targeted end-September 2026 (SB). ### Financial Sector — Stability, Credit, and Reforms - Private-sector credit: - Real credit to the private sector grew on average by 32 percent during 2025; stagnated since Q3:2025; projected real credit growth 2026 16.8 (Proj) in selected table. - Banking sector: - Banking system remains liquid and well capitalized with adequate provisioning despite rising NPLs, especially in consumer loans. - FX deposits rose rapidly to record levels; FX holdings outside the system available through Q4:2025. - Regulatory and supervisory measures: - Continued implementation and monitoring of Basel III and IFRS 9. - Macroprudential policies to limit FX lending to unhedged borrowers and enhanced disclosure of currency mismatches and contingent liabilities (MEFP ¶22). - Enhanced oversight of nonbank financial institutions (ALyCs), fintech, and VASPs. - Structural objectives: - Deepen capital markets while limiting vulnerabilities from FX and maturity mismatches. - Private credit is around 15 percent of GDP (authorities’ view); targeted expansion needed. ### Structural Policies, Labor Reform, and Investment Momentum - Structural reform priorities: - (i) Enhance predictability of tax and regulatory frameworks. - (ii) Reduce trade barriers and logistics costs. - (iii) Secure timely adoption of labor reforms while mitigating dislocation costs. - (iv) Strengthen governance and anti-corruption frameworks. - Labor Modernization Law key elements: - Severance pay cap equivalent to three times applicable collective‑agreement wage; statutory minimum floor 67 percent of salary (or one monthly wage). - Indexation rule: inflation plus a fixed annual rate of 3 percent for court-awarded severance. - Labor Assistance Fund (FAL) contributions: 1 percent of payroll for large firms and 2.5 percent for SMEs. - Regime for Incentives for Formal Employment (RIFL): temporary one-year reduction in employer social‑security contributions for newly formalized hires. - Working time flexibility, firm-level bargaining precedence, caps on union dues and employer contributions, and classification of platform workers as independent contractors. - Investment pipeline: - Projects approved under RIGI and RMI totaling about US$28 billion. - RIGI exceeds US$25 billion in approved projects (authorities’ reporting). ### Poverty Reduction — Progress and Challenges - Poverty declined from over 50 percent in H1:2024 to below 30 percent by Q3:2025; Box 1 key stats: - Poverty: from over 50 percent in H1:2024 to below 30 percent by Q3:2025. - Real per‑capita incomes in the bottom quintile increased by about 33 percent between Q3:2023 and Q3:2025, compared with 26 percent in the top quintile. - Contributions to poverty decline: - Relative inflation effect explains roughly 40 percent (7.3 p.p.) of the decline in the poverty headcount. - Labor income contributed 42 percent (7.5 p.p.). - Pensions explain about 2 p.p. of the decline. - Government transfers account for about 6 percentage points of income growth in the bottom decile; without transfers, poverty in Q3:2025 would have been 2.7 p.p. higher and extreme poverty 3.5 p.p. higher. - Remaining challenges: - Sustaining gains requires continued disinflation and recalibration of the safety net, worker retraining, and targeted childcare support. ### External Sector and Reserves — Assessment and Projections - Current account and reserves: - Current account (accrual) shifted to a deficit of 1.1 percent of GDP in 2025 from a surplus of about 1 percent in 2024. - Key indicator: Current account balance: 2024 0.9; 2025 -1.1; 2026 -0.8 (Proj). - NIIP declined from US$105.4 billion (16.2 percent of GDP) in 2023 to around US$48 billion (7.1 percent of GDP) at end-2025. - Gross international reserves (GIR) rose by about US$10.9 billion in 2025 to US$27.5 billion at end-December; increased by US$4.4 billion through April 21, 2026 to US$31.9 billion. - NIR fell to -$11.7 billion by end-2025 (current rates); NIR at program rates increased about US$4.8 billion year-to-date early 2026. - Reserve coverage remains very inadequate: GIR estimated at 38.1 percent of ARA metric (end-2025). - External assessment: - Staff’s preliminary assessment: Argentina’s external position in 2025 was weaker than implied by medium-term fundamentals and desirable policies. - Policy responses recommended: greater exchange rate flexibility; channel commodity export windfalls toward reserve accumulation; easing remaining FX restrictions as conditions permit with macroprudential safeguards. - FX regime changes and CFMs: - Significant liberalization since April 11, 2025 with progressive easing of FX restrictions for residents and firms, while some legacy restrictions and one MCP remain subject to Article VIII approvals. - Notable FX measures: September 2025 Communications, December 2025 new reference rate methodology, January 2026 easing to refinance securities-related liabilities, April 9, 2026 changes including exemptions to surrender requirement. - Staff notes remaining restrictions focused on legacy outflows and a MCP arising from a 30 percent withholding exchange tax on certain credit card FX settlements. ### Program Issues, Requests, and Board Assessment - Authorities’ requests: - (i) waiver of nonobservance of the end-December 2025 NIR performance criterion (PC); - (ii) modification of end-June 2026 quantitative targets on NIR and NDA to account for the end-2025 deviation; - (iii) establishment of new PCs and other targets; - (iv) approval to maintain exchange restrictions and one MCP under Article VIII Sections 2 and 3 temporarily. - Executive Board / Directors’ views (summary): - Welcomed stabilization progress, sharp decline in annual inflation, first fiscal primary surplus in years, and significant FDI announcements. - Noted mixed program performance through end-2025 and emphasized decisive implementation of a balanced policy package to support disinflation while strengthening external stability and sustaining growth. - Emphasized sustaining the fiscal anchor, achieving overall cash fiscal balance in 2026 via reductions in energy subsidies, improved targeting of social transfers, containment of discretionary spending, and strengthening central bank balance sheet, governance, and transparency. - Supported sustained implementation of BCRA’s FX purchase program combined with exchange rate flexibility to rebuild external buffers and secure market access. ### Debt Sustainability, Projections, and Risks - Debt dynamics and projections: - Public debt (Percent of GDP) selected path: Est. 2025 80.3; 2026 73.2; 2027 70.7; 2028 65.4; 2029 61.2; 2030 57.3; 2031 53.9. - Change in public debt (Percent of GDP): 2025 -4.3; 2026 -7.1; 2027 -2.6; 2028 -5.3. - Projected gross financing needs (Percent of GDP): 2025 29.8; 2026 22.4; 2027 17.0; 2028 19.1. - Probability of debt stabilization under the baseline is around 99 percent for the medium term (DSA fanchart). - Financing assumptions and contingencies: - External official financing (excl. IMF) disbursements (USD billions) for 2026–2031: 3.2 4.6 5.2 5.2 5.2 5.2. - Net financing (USD billions) 2026–2031: 0.3 1.6 1.9 2.1 2.5 2.5. - Contingent liability illustrative shock: one-off debt materialization of 6 percent of GDP. - Staff emphasis: take advantage of current window to tap international markets to refinance large principal payments to the private sector and the Fund (about US$20 billion during 2027), while gradually reducing exposure to senior official creditors. ### Data, Monitoring, and Program Technical Parameters - Data adequacy: broadly adequate for surveillance but shortcomings remain in CPI methodology, national accounts granularity, and external sector accrual data (quarterly with three-month lag). - Program monitoring and reporting: - Extensive daily, weekly, fortnightly, monthly, and quarterly data reporting requirements specified (see daily exchange rates, weekly BCRA balance sheet, monthly federal government operations within 25 days, quarterly provincial data within two months). - Program exchange rates for assessment up to end-March 2026: Argentine Pesos to the US dollar 1,053.50; for assessment starting end-June 2026: Argentine Pesos to the US dollar 1,459.42. - Structural benchmarks and technical steps: - Transition to IFRS (End-September 2026, SB). - Integrated IT system for tax administration (End-June 2026, SB). - Develop proposal for next phase of tax reform (End-December 2026, SB). - Implement three out of six priority recommendations from AML diagnostic (End-December 2026, SB). ### Staff Appraisal — Summary of Key Findings and Recommended Actions - Achievements since end-2023: - Credible fiscal anchor established and sustained. - Deregulatory reforms and exchange rate/monetary refinements delivered sharp disinflation and fiscal primary surpluses. - Expanded and better targeted social support reduced poverty levels substantially. - Remaining priorities and recommendations: - Sustain fiscal anchor: maintain federal primary surplus of about 1½ percent of GDP in 2026; continue spending restraint and subsidy rationalization. - Rebuild external buffers: sustain BCRA daily FX purchase program and exceed reserve targets as conditions permit; secure timely market access. - Further evolve monetary framework: support disinflation with enhanced exchange rate flexibility and move toward an interest-rate based framework over time. - Deepen structural reforms: tax and pension reforms, strengthen governance and anti-corruption frameworks, deepen capital markets, and safeguard social protection for vulnerable groups. - Contingency planning: maintain strong contingency plans and be prepared to tighten policies if external or domestic downside risks materialize. *Source: IMF staff and Executive Board documentation for Argentina, May 2026.* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context and Recent Developments - Authorities continue to make progress in stabilizing the economy, although political uncertainties during 2025 temporarily slowed growth and the disinflation process. - Stability is underpinned by a strong fiscal anchor and refinements to the monetary and FX framework, helping Argentina (now a net energy exporter) to weather the impact of the war in the Middle East. - Improved governance capacity since the October midterm elections enabled approval of: the 2026 Budget, the Fiscal Innocence Law, and the Labor Modernization Law. - Deregulation and opening measures continued, including free trade agreements with the United States and the European Union, contributing to a recent credit rating upgrade. ### Program Performance - Performance through end-2025 was mixed: - End-2025 fiscal targets were met. - The net international reserves (NIR) accumulation target was missed, largely due to a surge in dollarization ahead of the elections. - Subsequent adjustments to the monetary and FX framework, including the introduction of a daily reserve purchase program, have led the BCRA to purchase around US$7.5 billion since the start of 2026. - Most structural benchmarks were met; two were delayed due to technical reasons. - IMF Executive Board actions: - Completed the second review of Argentina’s 48‑month Extended Fund Facility (EFF) arrangement and concluded the 2026 Article IV consultation. - Decision unlocks about US$1 billion (SDR 0.8 billion) under Argentina’s US$20 billion (SDR 15.267 billion) EFF arrangement approved on April 11, 2025 (479 percent of quota). - The decision enables an immediate disbursement of about US$1 billion (SDR 0.8 billion), bringing total disbursements under the arrangement to about US$15.8 billion (SDR 11.452 billion). ### Outlook and Risks - Baseline projections: - Economy projected to expand by about 3½ percent in 2026. - End-of-period inflation projected to fall to around 25 percent in 2026. - Current account deficit expected to narrow somewhat in 2026, supported by more favorable terms of trade (higher oil prices) and continued improvements in energy, mining, and agricultural exports. - Capital inflows expected to recover, driven by FDI and more stable market access, supporting gradual and durable improvement in reserve coverage. - Near-term risks: - More balanced but remain elevated. - Tighter global financial conditions from heightened geopolitical tensions and political uncertainties ahead of the 2027 Presidential elections could weigh on program implementation. - Medium-term risk: - Safeguarding external sustainability will require careful management of the expected rapid expansion of primary sectors. ### Policy Priorities and Recommendations - Overarching objective: maintain stability by balancing disinflation, external sustainability, and growth, complemented by structural reforms to boost productivity, investment, and formal employment. - Fiscal policy - Target an overall fiscal balance. - Restrain spending by rationalizing subsidies, better targeting social assistance, and prioritizing infrastructure spending. - Further reform the tax, pension, and fiscal frameworks to strengthen the durability of the fiscal anchor and debt sustainability over the medium term. - Financing policies - Pursue a multipronged approach to meet near-term obligations: mobilize financing via increased access to local capital markets, asset sales, central bank repos, and commercial loans guaranteed by other official creditors. - Work over time to secure timely and sustained access to international capital markets and reduce Fund exposure. - Continue good-faith engagement to address outstanding claims. - Monetary and FX policy - Commit to rebuilding reserves in line with agreed targets and expected re-monetization of the economy. - Monetary policy to remain focused on supporting disinflation consistent with the targeted expansion of monetary aggregates. - Further enhancements to the framework to contain interest rate volatility. - Exchange rate to move flexibly within the widening band; FX sales limited to episodes of excessive volatility. - Use most profit distributions to the Treasury to recapitalize the central bank; strengthen BCRA’s balance sheet, governance, and mandate. - Improve quality and dissemination of inflation data. - Financial sector policies - Bolster regulatory and supervisory frameworks to support capital market deepening while limiting vulnerabilities from FX and maturity mismatches. - Enhance oversight of nonbank intermediaries and expand regulatory coverage as activity recovers. - Structural policies - Continue reforms to boost productivity, investment, formal employment, and net exports, with emphasis on: - (i) enhancing predictability of tax and regulatory frameworks; - (ii) reducing trade barriers and logistics costs; - (iii) securing timely adoption of labor reforms while mitigating dislocation costs; - (iv) strengthening governance. ### Program Issues and Requests - Authorities are requesting: - (i) a waiver of nonobservance of the end-December 2025 NIR performance criterion (PC); - (ii) a modification of the end-June 2026 quantitative targets on NIR and NDA to account for the end-2025 deviation; - (iii) establishment of new PCs and other targets; - (iv) approval to maintain the exchange restrictions and one multiple currency practice (MCP) under Article VIII Sections 2 and 3. ### Executive Board Assessment (summary of Directors' views) - Directors welcomed progress in stabilizing and creating a more market-based economy under the EFF arrangement, noting sharp decline in annual inflation, the first fiscal primary surplus in years, and significant FDI announcements. - Directors noted mixed program performance until end-2025, with delays in rebuilding external buffers, and welcomed refinements to the monetary and FX frameworks that supported reserve accumulation and market confidence. - Directors emphasized: - Decisive implementation of a balanced policy package to support disinflation while strengthening external stability and sustaining growth. - Sustaining the fiscal anchor and achieving an overall cash fiscal balance in 2026 through reductions in energy subsidies, improved targeting of social transfers, and containment of discretionary spending. - The need to enhance equity and efficiency of tax and pension systems and strengthen fiscal frameworks across all levels of government. - Sustained implementation of the central bank’s FX purchase program combined with exchange rate flexibility to rebuild external buffers and strengthen shock management capacity. - Importance of securing timely and durable access to international capital markets to refinance large public sector FX obligations and gradually reduce Fund exposure; continue good faith efforts to resolve outstanding claims. - Further evolution of the monetary framework to support disinflation and exchange rate flexibility, including enhanced transparency, publication of quarterly reports, and measures to contain interest rate volatility. - Strengthening of the central bank’s balance sheet, governance and mandate, and improving quality and dissemination of inflation data. - Deepening capital markets while containing financial risks arising from FX and maturity mismatches through regulatory and supervisory improvements. - Continued progress on deregulation and reform legislation to create a more competitive and open economy, and the importance of strengthening oversight independence, transparency in procurement and privatization, and governance frameworks. - Maintenance of strong contingency plans and prompt implementation should external or domestic downside risks materialize; continued social support to mitigate near-term adjustment costs. ### Key Economic Indicators (selected, percent of GDP or as indicated) - Real GDP (% change): 2024 -1.3; 2025 4.4; 2026 3.5 (Proj) - Unemployment rate (percent): 2024 7.2; 2025 7.4; 2026 7.2 (Proj) - Consumer prices, end of period (% change): 2024 117.8; 2025 31.5; 2026 25.0 (Proj) - Federal government revenues: 2024 16.8; 2025 15.9; 2026 15.5 (Proj) - Primary expenditure: 2024 15.0; 2025 14.6; 2026 14.1 (Proj) - Primary fiscal balance: 2024 1.8; 2025 1.4; 2026 1.4 (Proj) - Federal government debt: 2024 84.7; 2025 80.3; 2026 73.2 (Proj) - Monetary base: 2024 5.1; 2025 5.1; 2026 5.2 (Proj) - Credit to the private sector, real (eop, % change): 2024 51.7; 2025 32.3; 2026 16.8 (Proj) - Current account balance: 2024 0.9; 2025 -1.1; 2026 -0.8 (Proj) *Source: IMF staff and Executive Board documentation for Argentina, May 2026.* ### 1. Poverty Reduction: Progress and Challenges __________________________________________________ 34 ### 1. Poverty Reduction: Progress and Challenges ### Context - Stabilization program since the Milei administration (assumed office toward end-2023) has delivered notable results: annual inflation fell from triple to double digits; a strong fiscal anchor established with two consecutive years of primary surpluses for the first time in nearly two decades; many distortive regulations, trade barriers, and FX restrictions unwound—resulting in substantial progress in implementing the 2022 Article IV recommendations. - The initial rebound, together with lower inflation and expanded targeted social assistance, helped to reduce poverty (see Box 1 in source). Political uncertainties ahead of the October midterm elections led to a surge in resident dollarization and reserve losses, triggering much tighter monetary conditions and unprecedented financial support from the U.S. Treasury’s Exchange Stabilization Fund (ESF). - Improved sentiment and governing capacity following the midterm elections generated renewed reform momentum: enhancements to the monetary and FX frameworks, gradual rebuilding of reserve buffers, congressional approval of the 2026 Budget (the first in two years), the Fiscal Innocence Law, the Labor Modernization Law, and legislation on mining regulation in glacial and periglacial areas. Congress ratified the Mercosur–European Union free trade agreement. Fitch upgraded Argentina’s credit rating to B- from CCC+. - Remaining vulnerabilities: inflation still high, reserve buffers thin, work continues toward durable market access; tax system remains burdensome and inefficient; capital markets underdeveloped with large resident assets outside the financial system; country relatively closed to trade; institutions need further strengthening. Authorities committed to rebuilding reserves, enhancing the monetary framework, securing timely and sustainable access to international capital markets, and pursuing tax, pension and fiscal framework reforms. Continued support for the most vulnerable and measures to mitigate near-term dislocation costs of reforms remain imperative. ### Recent Developments — Activity, Inflation, and Labor - Real GDP expanded by 4.4 percent in 2025, following a contraction in 2024; recovery supported by stronger private demand, recovering investment, and robust exports—particularly in energy, mining, and agriculture—while imports rose sharply after easing trade and FX restrictions. - Recovery uneven across sectors: labor‑intensive construction and manufacturing lag relative to primary and financial sectors. Activity and employment growth slowed since mid-2025 amid political uncertainty and tight credit conditions. - Unemployment reached 7½ percent at end-2025 (about 1 percentage point above end-2024 levels), with rising informality and slowing real wage growth. High-frequency indicators point to renewed momentum more recently, supported by record agricultural output and incipient normalization of credit conditions. ### Recent Developments — Inflation and Monetary Policy - Annual inflation fell from over 200 percent in late 2023 to around 32½ percent by early 2026, supported by tight monetary conditions, prudent fiscal policy, and trade liberalization. Monthly headline inflation rose to 3.4 percent in March 2026 due to higher food and regulated prices, lagged effects of collapse in money demand and currency depreciation ahead of midterm elections. Inflation expectations remain relatively well anchored and consistent with a gradual recovery in money demand and reduction in monthly inflation during the remainder of the year. - Policy settings gradually eased alongside improved market sentiment and lower sovereign spreads (currently around 500-525 bps). BCRA published its first monetary policy report in two years and fine-tuned liquidity operations to contain short-term interest rate volatility. Exchange rate band adjustments (bands expanding at the rate of realized inflation with a two-month lag) and a daily reserve purchase program resulted in cumulative FX purchases since the start of the year of around US$7.5 billion (over US$80 million per day or about 20 percent of traded FX volume), enhancing credibility of the band. The peso has stabilized, appreciating by around 13 percent in real terms since end-2025; exchange rate futures remain well below (20 percent) the top end of the band. - BCRA concluded repo agreements totaling US$6 billion with international banks (US$3 billion of which took place in January 2026), and entered into a new swap agreement in October 2025 with U.S. Treasury under the ESF for US$20 billion. ### Recent Developments — Fiscal and Debt Management - The federal primary surplus reached 1.4 percent of GDP in 2025, yielding an overall cash surplus of 0.2 percent of GDP; real revenues rose by 6.6 percent (excluding the impact of lower trade taxes), supported by continued expenditure restraint and higher pension spending (consistent with the inflation indexation formula). Primary expenditures reached 14.6 percent of GDP, the lowest in over two decades. - The approved 2026 budget preserves the overall balance, implying a broadly unchanged primary surplus of about 1½ percent of GDP (excluding extraordinary privatization receipts). Improved targeting of subsidies and social spending offsets late-2025 congressional spending initiatives and lower social security contributions from the recently enacted labor reform. Early-2026 outturns consistent with the overall balance objective—weaker activity-related revenues offset by declines in primary spending. - Provincial primary balances deteriorated by nearly 1 percent of GDP in 2025; provincial primary balances estimated to have shifted from a surplus of 0.4 percent of GDP in 2024 to a deficit of about 0.5 percent of GDP in 2025. - Treasury refinanced about 95 percent of peso obligations falling due in 2025. On the FX front, the Treasury placed around US$5 billion to refinance most of its principal obligations in 2025 and early 2026, including issuance of domestic-law FX bonds (the first such issuance since 2018), and is mobilizing loans from international banks backed by guarantees from other official creditors. ### Recent Developments — External Sector and Reserves - The current account (on an accrual basis) shifted to a deficit of 1.1 percent of GDP in 2025, from a surplus of about 1 percent of GDP in 2024. Strong export growth—led by energy and agriculture—was more than offset by a surge in imports and an important deterioration in the services balance (notably higher outbound tourism). Income balance remained generally unchanged and negative, reflecting public sector FX interest obligations. - The financial account weakened sharply in 2025 due to increased hedging by households and corporates amid political uncertainty, triggering temporary support from swap agreements. Net international reserves (NIR) declined by about US$9 billion during 2025, depleting liquid reserve buffers. Since end-2025, the financial account strengthened markedly—unwinding earlier hedging, a rebound in corporate and provincial FX issuances, new BCRA repo agreements with international banks, and Treasury debt placements—supporting strong FX purchases under the BCRA program. NIR expanded by about US$4.8 billion (at program rates) year to date (early 2026), despite easing of the restriction on dividend payments (for profits from last year) starting in January. - Staff’s preliminary assessment suggests Argentina’s external position is weaker than the level implied by medium‑term fundamentals and desirable policies (see Annex I). External vulnerabilities reflect weak reserve coverage and lack of sustained access to international capital markets amid sizable FX debt obligations; reforms are addressing these vulnerabilities while expanding energy and mining export capacity. *Source: IMF staff.* ### 12. After expanding rapidly, private-sector credit has slowed while progress continues in ### 12. After expanding rapidly, private-sector credit has slowed while progress continues in ### Private‑sector credit, banking conditions, and FX developments - Real credit to the private sector grew on average by 32 percent during 2025, supported by declining excess liquidity and reduced exposure to the public sector. - Credit in real terms has stagnated since Q3:2025 and non-performing loans (NPLs) have risen, especially for the consumer loan segment, reflecting tight monetary conditions and some moderation in households’ real income growth. - Despite declines from high levels, bank profitability has improved; the banking system remains liquid and well capitalized with adequate provisioning. - FX developments: - Rapid rise in FX deposits, which have reached record levels; household FX purchases have remained within the banking system. - This has supported gradual expansion of FX lending to naturally hedged borrowers while FX liquidity buffers remain comfortable. - FX holdings outside the system are available through Q4:2025; data for deposits in private banks is available through March 2026. ### Financial‑sector reforms and risk mitigation - Financial sector risks have been mitigated since the last Article IV through: - Substantial progress in aligning supervision and regulation with international standards. - Removing subsidized credit programs. - Eliminating interest rate caps. - Reducing the sovereign‑bank nexus. - Consequence: improved market functioning and lower systemic vulnerabilities relative to earlier episodes of dollarization. ### Structural reforms and investment momentum - Structural reforms continued across customs, health, transport, communications, and electricity pricing; efforts to modernize public administration progressed. - Privatization initiatives are progressing; tenders launched for construction and maintenance of critical transport networks. - Foreign investment momentum: - Projects approved under Special Investment Regime for Large‑and Medium‑Sized Firms (RIGI and RMI) totaling about US$28 billion. - Amendments to the Glacier Law and Rural Land Ownership Law supported these investments. - Labor Modernization Law aims to boost formal job creation through streamlined hiring procedures, lower dismissal costs, reduced litigation risks, and decentralized collective bargaining. ### Program performance through end‑2025 - Mixed performance against quantitative targets: - Primary fiscal balance end‑December QPC: met with a margin, supported by strong revenues and continued spending restraint. - Domestic arrears: remained well below the ceiling (although rising slightly more recently). - No direct central bank financing, despite temporary BCRA interventions in the peso debt market. - Indicative target on social spending coverage exceeded the floor; universal child allowance and food assistance programs covered about 96 percent of the basic consumption basket. - NIR end‑December QPC: missed by a large margin—At program exchange rates, NIR fell US$10 billion below the floor, reflecting earlier delays in building reserves and large private outflows triggering FX sales by the BCRA and Treasury ahead of the midterm elections. - Since end‑2025, NIR is up by about US$4.8 billion, reflecting implementation of the BCRA’s daily FX purchase program and mobilization of FX financing. - Net Domestic Assets (NDA) end‑December indicative target: exceeded the program ceiling by about ARS4.5 trillion, reflecting Treasury refinancing difficulties and much lower-than-anticipated money demand (base money stabilized around 4.6 percent of GDP last year, well below the 8 percent average during 2010–19). ### Structural agenda implementation and institutional steps - Key milestones (status as reported): - Congress approved the 2026 budget—consistent with a zero overall cash deficit (note: did not include a medium‑term fiscal framework; authorities working to include it in next year’s draft budget end‑September 2026, SB). - Closed 29 of 31 extra‑budgetary trust funds (legal challenges delayed the remaining two; end‑December 2025, SB, not met). - Finalized and submitted to Congress a plan to eliminate extra‑budgetary entities (end‑September 2025 SB, met). - Published reports on SOEs covered by Law 27.742 with guidelines for transparent privatizations (mid‑November 2025 SBs, met). - Issued a report on implementation of key FATF recommendations with Fund TA support (end‑November 2025 SB, met). - Created a single social registry with World Bank support (end‑December 2025 SB, met). - Expanded coverage of the e‑SIDIF financial information system with IDB support (end‑December 2025 SB, met). - Presented a plan to enhance the efficiency and simplicity of the tax system (end‑December 2025 SB, met). ### Outlook and key quantitative projections (baseline assumptions) - Baseline predicated on policies balancing disinflation and reserve accumulation and on gradual resumption of international market access; incorporates updated global outlook including impact of the conflict in the Middle East. - Growth: - Real GDP projected to expand by about 3½ percent in 2026. - Over the medium term growth expected to converge toward 3 percent. - Inflation: - End‑2026 inflation projected at around 25 percent y/y (down from 31½ percent y/y at end‑2025). - Disinflation expected to converge to single digits by 2028 with tight policies and enhancements to the monetary framework. - Fiscal: - Primary surplus at the federal government level projected to reach 1.4 percent of GDP in 2026—broadly unchanged from 2025. - Over the medium term, primary surplus expected to gradually rise to about 2¼ percent of GDP. - External: - Current account deficit projected to improve modestly during 2026. - NIR expected to increase by at least US$8 billion in 2026. - Selected quantitative baseline table entries (as presented): - GDP growth (avg, %) 2024: -1.3; 2025: 4.3; 2026: 4.0; 2027: 3.8; 2028: 3.8 - Inflation (eop, %) 2024: 117.8; 2025: 31.5; 2026: 25.0; 2027: 12.5; 2028: 7.5 - Primary fiscal balance (% of GDP) 2024: 1.8; 2025: 1.4; 2026: 1.4[1.4-1.8]; 2027: 2.0 - Current account balance (% of GDP) 2024: 0.9; 2025: -1.1; 2026: -0.8; 2027: -0.6; 2028: -0.5 - Monetary base (eop, % of annualized Q4 GDP) 2024: 4.2; 2025: 4.6; 2026: 4.7; 2027: 5.5; 2028: 6.0 - Change in net int’l reserves (US$bn) 2024: 4.9; 2025: -12.1; 2026: 10.0; 2027: 11.0; 2028: 17.0 ### Risks, contingencies, and policy recommendations - Risks: - External: Elevated geopolitical tensions could tighten global financial conditions, complicating reserve accumulation and market access; higher oil prices could pass through to domestic prices and complicate subsidy reduction. - Domestic: Political uncertainties ahead of the 2027 Presidential elections could trigger capital outflows and slow or reverse reform momentum; stalling improvements in employment and real incomes could increase vulnerabilities. - Upside risk: Stronger energy prices, a more diversified export base, effective implementation of trade agreements, and continued reforms could improve the energy trade balance, attract additional FDI, and bolster growth. - Contingency and policy responses: - Rapidly rebuild buffers in a shock‑prone external environment. - Allow the exchange rate to act as a shock absorber; tighten monetary and liquidity conditions if needed to support peso demand and the exchange rate band regime. - Tighten fiscal stance if risk premia rise or volatility returns, including faster subsidy rationalization and streamlined transfers to provinces and SOEs. - Advance structural reforms, especially tax reform, to strengthen credibility of the fiscal anchor. - Consider temporary use of existing swap lines for confidence support, but not as a substitute for required macroeconomic adjustments. ### Authorities’ views - Authorities broadly concurred with staff’s near‑term outlook but were more optimistic on upside risks and medium‑term growth: - They view medium‑term growth could reach 4.5 percent due to structural reforms, large investments, and asset repatriation. - They expect disinflation could reach single digits earlier, reflecting a strong fiscal anchor and faster re‑monetization. - Committed to enhancing exchange rate flexibility and strengthening external buffers to support timely re‑access to international capital markets. - Emphasized substantial upside potential via RIGI and RIMI investment pipeline in energy, mining, knowledge economy, and agribusiness. ### Fiscal policy understandings and near‑term measures - Authorities will maintain a zero overall cash fiscal balance target, consistent with a gradual increase in the fiscal primary surplus. - Achieving the 2026 budget (primary cash surplus of about 1½ percent of GDP) requires strong expenditure discipline to offset: - Lower statutory agricultural export taxes. - Congressional spending initiatives approved in late 2025 (0.35 percent of GDP). - Tax measures under the new Labor Modernization Law (0.15 percent of GDP). - Offsetting measures under baseline and contingencies (percent of GDP, national government) as presented: - Fiscal pressures: 0.50 - University spending 1/: 0.20 - Disability pensions 1/: 0.15 - Labor Modernization Law: 0.15 - Offsetting measures under baseline: 0.51 - Enhanced social spending targeting: 0.20 - Enhanced energy subsidy targeting: 0.07 - Public wage reduction: 0.10 - Prioritization of capital spending: 0.10 - Rationalization of discretionary spending: 0.04 - Additional contingency measures: 0.35 - Postponement of labor market law: 0.15 - Strengthening of excises: 0.10 - Enhanced transport subsidy targeting: 0.10 - Consideration would be given to strengthening excises, accelerating reduction in transportation subsidies and/or delaying implementation of the Labor Modernization Law. *Source: IMF staff report excerpt (text unit provided).* ### 20. The fiscal anchor will need to be supported by enhancements in the equity and ### The fiscal anchor will need to be supported by enhancements in the equity and efficiency of the tax system ### Fiscal reforms and revenue administration - A reform plan is underway to gradually reduce distortive taxes—including on trade and financial transactions—while simplifying the tax system and broadening the tax base by rationalizing exemptions and special regimes (end-December 2026, SB). - Reforms intended to be phased, fiscal and economic conditions permitting, and in close consultation with provinces because reforms would likely increase the share of revenues allocated to provincial governments and could support tax reforms at the subnational level. - Complementary improvements in revenue administration: - Implement the new Fiscal Innocence Law (which reduces compliance costs). - Launch an integrated IT system (end-June 2026, SB). - Establish a formal compliance risk registry (end-December 2026, SB). - Staff recommendation: take opportunities for early adoption of a more front-loaded revenue reform to support fiscal consolidation, debt management, growth, and external objectives as trade openness deepens. ### Expenditure and pension reforms - Deeper expenditure reforms planned, including: - Unified energy subsidy scheme expected to improve cost recovery and strengthen targeting and transparency of subsidies. - Measures to enhance: (i) effectiveness of social spending via improved social data systems; (ii) public investment governance through better project appraisal, selection, and monitoring; (iii) budget control and cash management, including integrating all remaining entities into the integrated financial management information system (MEFP¶15). - Pension reform: - To be developed as progress in reducing the informality gap proceeds (end-December 2027, SB). - Objectives: improve sustainability, reduce fragmentation, strengthen link between contributions and benefits, ensure adequate protection for the most vulnerable. - Recommendation: sequence reform with early preparation and stakeholder discussions to secure consensus. - Contextual statistic: Pension spending accounts for about 45 percent of the federal budget and is projected to rise further as demographic pressures intensify and disinflation proceeds. ### Strengthening the fiscal framework - Efforts underway to embed the authorities’ zero-deficit rule in the Fiscal Responsibility Law (end-December 2026, SB) to elevate its legal status and ensure fiscal policy predictability, alongside the draft Fiscal and Monetary Stability bill (MEFP ¶16) prohibiting monetary financing and tightening constraints on deficit spending. - Draft 2027 budget (end-September 2026, SB) will incorporate a medium-term fiscal framework and a comprehensive fiscal risk statement. - Staff view: legal standing for the fiscal anchor should be complemented over time by: - a medium-term debt anchor; - an independent fiscal council to monitor and secure compliance; - more conventional reporting of the interest bill. - Need to enhance coordination with subnational governments to align fiscal objectives across government levels and, where relevant, establish binding spending and borrowing constraints at the subnational level, including ensuring FX borrowing remains consistent with provinces’ FX generating capacity. ### Authorities’ views on fiscal strategy - Authorities fully committed to the fiscal anchor and planned tax, pension, and fiscal framework reforms. - Planned phased tax reform initially focused on reducing tax expenditures, enhancing excises, and simplifying the tax system; may move more aggressively if economy grows faster or if yields from the Fiscal Innocence Law exceed expectations. - Pension reform seen as best adopted in a two-pronged context: (i) rising labor formality expected to materialize as the Labor Modernization Law is implemented; (ii) subsequent tax reform to boost private-sector led growth. - Authorities highlighted achievements in strengthening expenditure controls, reducing transfers to SOEs, eliminating extra-budgetary entities, and efforts to improve the Fiscal Responsibility Law. - Seeking to strengthen coordination with provincial governments and enforce existing limits on sub-national FX and peso borrowing. - Reaffirmed commitment to the overall fiscal balance over the medium term and noted that, under the assumption of full rollover of principal debt payments and current market conditions (expected to improve significantly), the required medium-term primary balance is materially lower than suggested by staff. ### Financing policy and debt management - Strategy consistent with timely refinancing of debt obligations, improvements in the public debt profile (and the program’s reserve targets), and gradual expansion of access to capital markets as conditions improve. - Peso debt strategy: - Priority to secure full rollover rates while extending maturities; average peso debt maturity to the private sector currently stands at around 12 months. - Continue regular issuances of fixed‑rate Treasuries (LECAPs) across short and medium tenors and expand instrument menu, including greater use of variable‑rate treasuries. - Maintain a modest buffer in the Treasury account at the BCRA to contain rollover risks (MEFP ¶21). - FX debt strategy (multipronged approach to deal with FX obligations falling due this year, MEFP ¶18): - Continued issuance of U.S. dollar-denominated instruments in the local market (US$5 billion). - Sale of SOEs (US$2 billion). - Central bank repos (US$3 billion thus far). - Commercial loans from international banks guaranteed by official creditors. - External financing support: - Discussions with World Bank Group, IADB, and CAF expected to provide debt guarantees for around US$4 billion in longer-term commercial loans aimed at substantially reducing debt interest costs. - Complemented by continued project and budget support loans of about US$3 billion this year. - Staff emphasis: take advantage of this year’s window to start tapping international markets to refinance large principal payments to the private sector and the Fund (about US$20 billion during 2027), while gradually reducing exposure to senior official creditors. - Authorities’ objective to mobilize financing from domestic capital markets, including tapping large US dollar holdings of residents (estimated at over US$200 billion). ### Authorities’ views on financing - Authorities committed to reducing public debt vulnerabilities and re-accessing international capital markets. - Highlighted success in refinancing debt obligations during 2025 and early-2026 despite political uncertainties and sharply lower peso demand. - Argue temporary reliance on official support (including guarantees) was warranted given rising geopolitical uncertainties and market concerns; referenced Fitch upgrade to B- from CCC+. - Place increased priority on mobilizing domestic financing, including tapping estimated resident US dollar holdings of over US$200 billion. ### Monetary and exchange rate policies - Exchange rate policy: - Exchange rate will remain freely determined within the widening band framework, with foreign exchange sales within the band and forward market interventions limited to episodes of excessive volatility. - Central bank will continue to accumulate reserves through its daily FX purchase mechanism, consistent with projected recovery in money demand and the program’s NIR targets (at least US$8 billion during 2026), supported by appropriately tight monetary conditions and the authorities’ market access strategy (see ¶24). - Re-activation of existing official swap lines would only be considered in extreme risk events. - October 2025 swap agreement with US Treasury under the Exchange Stabilization Fund stands at US$20 billion, although the activated portion was repaid using a swap line with the BIS, which is expected to be repaid by end-2026. - BCRA is well advanced in extending its swap agreement (worth about US$18 billion) with the People’s Bank of China (PBOC) and in refinancing the activated portion of the swap (US$5 billion). - Monetary policy stance and implementation: - BCRA will continue to target monetary aggregates to achieve disinflation objectives and allow a managed expansion of monetary aggregates consistent with recovering money demand, while keeping NDA generally unchanged (near-term deviations possible). - Recent operational refinements include: (i) added a liquidity facility for banks; (ii) lowered banks’ daily reserve requirement from 100 to 65 percent; (iii) steps to improve market microstructure to reduce segmentation in the money market (prior actions). - Commitment to publish quarterly monetary policy reports analyzing inflation dynamics and explaining policy rationale. - Current assessment: - Monetary conditions eased somewhat since end-February but remain appropriately tight, reflected in continued currency appreciation amidst FX purchases, still tight credit conditions (real consumer lending rates remain at elevated positive levels), and contained expansion of base money. - Inflation dynamics recently driven largely by relative price adjustments and higher fuel prices linked to the conflict in the Middle East. - BCRA must be prepared to tighten policy if needed to keep inflation and inflation expectations on a firm downward path. ### Longer-term monetary and institutional recommendations - Establish a nominal anchor amid increased exchange rate flexibility; consider clarifying nominal target for monetary aggregates while allowing framework to evolve toward greater exchange rate flexibility and increased reliance on the interest rate as key tool, with inflation targets eventually replacing monetary aggregates as the nominal anchor. - Strengthen the BCRA’s balance sheet and institutional framework, including: - Use a sizable portion of the BCRA’s profit transfers to the Treasury (see Box 7 and MEFP ¶21). - Transition to IFRS accounting standards (end-September 2026, SB). - Modernize BCRA internal governance and organization (MEFP ¶21). - Broader legal reforms to the BCRA charter over the medium term to strengthen independence, governance, and accountability and reinforce safeguards against monetary financing. - Consider early publication of inflation data based on updated consumption weights and enhance independence of INDEC given past issues. - Focus on external resilience: - Sustained reserve accumulation essential to mitigate shocks and secure stable market access; program’s objective to reach at least US$8 billion in NIR accumulation during 2026. - Manage projected windfall from increased primary exports by saving large share of windfall revenues through tighter fiscal policy and faster reserve accumulation, complemented by strengthened prudential regulation to prevent credit booms and unhedged FX exposures. ### Authorities’ views on monetary framework - Authorities stressed that, after averting hyperinflation, the BCRA’s monetary targeting framework has delivered swift disinflation to low double-digit levels and expressed confidence disinflation will continue despite global price shocks. - Noted adverse money demand shock of 2025 (50 percent of private M2) triggered by political uncertainty and ongoing refinements to the monetary framework. - Argued that weak interest rate channels at current inflation levels make inflation targeting a poor substitute for monetary targeting and cautioned that rigid rules could undermine credibility. - Considered central bank charter reform not an urgent necessity, while emphasizing the importance of communication (new quarterly monetary policy report) and that re-monetization would support reserve purchases. - Cautioned against establishing causality between reserve levels and sovereign risks, noting both are driven by common factors. *Italic line: Source: 1argea2026001 - 20. The fiscal anchor will need to be supported by enhancements in the equity and efficiency of the tax system.* ### 30. Regulatory and supervisory frameworks are being enhanced to support a responsible ### Regulatory and supervisory frameworks are being enhanced to support a responsible expansion of private bank credit ### Financial-sector regulatory and supervisory measures - Continued implementation and monitoring of Basel III and IFRS 9. - Monitoring emerging risks from deterioration in NPLs, especially the consumer segment. - Monitoring banks’ increased reliance on short-term mutual fund funding given implications for funding volatility and the extension of longer-term credit. - Bank supervisors will: - continue to ensure adequate provisioning; - maintain close oversight. - Macroprudential policies will aim at limiting financial risks, including by: - keeping prudent limits on FX lending to unhedged borrowers; - enhanced disclosure of currency mismatches and contingent liabilities (MEFP ¶22). ### Nonbank supervision and capital markets reform - Nonbank credit represents about 15 percent of overall bank credit. - Enhanced oversight of nonbank financial institutions—including clearing and settlement agents (ALyCs)—to ensure a more level regulatory playing field. - Enhanced monitoring of rapid fintech growth, where NPLs are very high, and Virtual Asset Service Providers (VASPs). - Continued strengthening of coordination between the BCRA and the National Securities Commission (CNV) and expansion of regulatory coverage as needed. - Priority to deepen Argentina’s capital markets and promote competition, but expected to take time and be carefully managed to avoid adding to macroeconomic vulnerabilities. ### Authorities’ views on credit mobilization and FX lending - Authorities concur with the urgent need to mobilize domestic savings while responsibly expanding credit. - Private credit is at around 15 percent of GDP, noted as well below peers. - As stabilization proceeds and reserves are rebuilt, authorities believe consideration could be given to easing prudential norms on FX lending, building on experience from Peru and Uruguay. - Authorities focus on deepening capital markets by encouraging longer-term saving instruments and expanding corporate investment opportunities. ### Structural policies to raise growth potential - Real per capita GDP fell by close to 15 percent over 2011–24, reversing convergence gains. - Staff analysis suggests sustained implementation of the structural reform program could raise GDP levels by a yearly average of about 3–5 percentage points over five years (see Box 5 of the April 2025 Staff Report). - Key reform areas and measures: - Labor markets: - Timely implementation of the Labor Modernization Law to address labor rigidities, strict regulations, high severance costs, and centralized bargaining. - A new Decree recently issued formally reducing employer social security contributions for new formal hires under tightly defined conditions, while preserving contributions to the Labor Assistance Fund. - Complementary active labor market policies, particularly training initiatives, are being considered. - Strategic investments: - Evenhanded implementation of existing special Investment regimes (RIGI and RIMI) with safeguards. - Recent amendments to the Glacier Protection Law to clarify environmental regulatory framework and reduce legal uncertainty while preserving safeguards. - Investments under RIGI and RIMI in glaciers and periglacial areas should continue to incorporate environmental impact assessments. - Logistics and infrastructure: - Public tenders advanced to expand port capacity and modernize transport networks. - Tenders for over 9,000 km of roads, including major routes across 14 provinces, are expected to be awarded in stages during 2026. - Staff underscored importance of public and transparent bidding and proper risk sharing between public and private sectors. ### Governance, anti‑corruption, and institutional reform - Achievements: - Deregulation reforms have narrowed opportunities for rent-seeking. - Strengthening transparency in public procurement and privatization/concession processes and conflict-of-interest prevention, including work on the Public Ethics Bill. - Implementation of a risk-based AML/CFT framework with updated thresholds and greater focus on higher-risk sectors, strengthened oversight of VASPs, and enhanced fit-and-proper requirements. - Beneficial Ownership Registry reinforced through improved reporting, verification, and inter-agency information sharing. - Work underway to develop implementation plans to priority recommendations of the Fund’s AML/CFT diagnostics report (end-December 2026 SB). - Challenges: - Governance challenges persist (as reported by Transparency International Corruption Perception Index). - Needed actions: - Strengthen independence of oversight institutions (Anticorruption Office, Financial Intelligence Unit, Ombudsperson Office, Statistics Agency). - Establish a more robust legal framework to prevent, detect, and sanction corruption. - Strengthen judicial independence and capacity to expedite case resolution (see Box 9). ### Authorities’ perspective on reforms - Authorities view structural reforms as path breaking and critical for durably raising living standards. - Expect reforms to boost formal employment and FDI, particularly in energy, mining, and AI. - Anticipate improvements in the balance of payments from these developments. - Consider short-term dislocation costs from openness reforms manageable given expected employment spillovers from primary sectors. - Plan to continue strengthening governance and transparency and to enhance operational independence of key economic and accountability institutions, seeking technical assistance as needed. - In March 2026, Argentina repealed overly restrictive pharmaceutical patent guidelines. ### Program and surveillance issues: targets, financing, and arrears - Quantitative targets and program adjustments: - Authorities request a waiver of nonobservance for the PC on NIR accumulation for the end-2025 test date, citing consistent policy implementation since early 2026. - NIR shortfall at end-2025 is about US$10 billion. - Proposed lowering of the NIR accumulation target for end-June 2026 to account for the 2025 shortfall. - Reserves are expected to increase steadily through 2026, unwinding most of the end-2025 shortfall of about US$10 billion. - In faster re-monetization or stronger FX market access scenarios, NIR accumulation would exceed the revised target (see MEFP ¶19). - Over the medium term, gross reserves are expected to reach close to 85 percent of the ARA metric (for countries under a fixed exchange rate regime) by 2029. - Program goal: achieve a 100 percent ARA metric by the first year after the program period. - Indicative NDA ceiling for end-June 2026 proposed to be revised to reflect updated NIR targets and provide a moderate buffer to support the peso debt market. - New PCs proposed for all relevant indicators for December 2026 and new ITs proposed for June 2027. - Financing assurances and MDB support: - Firm financing assurances in place from official creditors over the next 12 months. - Net financing from MDBs, including loan guarantees from the World Bank Group, CAF, and IDB, is projected to reach about US$3 billion this year. - Good prospects for renewal of the PBoC swap line, with firm assurances that the activated portion of the swap line falling due mid-2026 would be refinanced. - Capacity to repay: - Obligations to the Fund are projected to peak at about 8 percent of exports in 2030 and 18 percent of central bank gross reserves in 2027. - Argentina’s low level of liquid reserves remains a risk to repayment capacity given very large near-term debt obligations and potential volatility ahead of the 2027 Presidential elections. - Arrears policy and litigation status: - Agreement reached in March 2026 with creditors that did not participate in earlier exchanges; legislation submitted to Congress authorizing associated payments. - Final judgment of about €1.5 billion delivered in October 2024 in the UK GDP-warrant case; roughly €300 million already paid in early 2025. - Authorities intend to settle the GDP-warrant issue comprehensively once arrears to holdout creditors from prior restructurings are addressed. - Good-faith engagement continues with Mobil Exploration on a repayment plan for principal claims for US$196 million. - External arrears claims under litigation include: - Bpifrance Assurance Export, which filed an appeal with the Supreme Court of Justice on December 2, 2022. - Titan Consortium, LLC, where a legacy claim remains under litigation on statute-of-limitations grounds. - YPF litigation: a lower court awarded damages of about US$16 billion, but the US Court of Appeals for the Second Circuit overturned that judgement in March 2026; plaintiffs may seek arbitration before the International Center for Settlement of Investment Disputes. - Staff judges adequate safeguards remain in place for the use of Fund resources and that Argentina’s reform efforts are not undermined by creditor-debtor relations or litigation cases abroad. ### Exchange arrangements, capital flow measures, and data quality - Exchange restrictions: - Argentina maintains several exchange restrictions and one MCP subject to Fund approval under Article VIII, Sections 2(a) and 3. - Staff assesses these remaining FX restrictions (mainly to address legacy import payment backlogs, legacy dividend and debt service payments) and the MCP have been kept in place to ease balance of payments pressures and supports temporary maintenance with intent to eliminate gradually during the program. - During 2023-25, numerous changes introduced to the CFMs framework, with the majority focusing on easing controls. - Going forward, authorities should proceed with further liberalization of capital flows as conditions permit, noting CFMs should not substitute for warranted macroeconomic policies. - Data quality and adequacy: - Data quality is broadly adequate for surveillance, albeit with shortcomings (see Annex V). - Improvements: - Greater transparency in the BCRA’s balance sheet and financial reporting as it aligns practices with national and international accounting standards. - Shortcomings and gaps: - Prolonged delay in updating the CPI has left methodology outdated and less representative of the current consumption basket. - National accounts suffer from limited granularity and accuracy, partly reflecting an outdated base year. - External sector statistics have limitations: accrual data outside goods trade is available only quarterly with a three-month lag. - Institutional framework governing INDEC needs modernization. - Fund staff stands ready to provide technical assistance to address these shortcomings and improve overall data quality. *Source: IMF staff report excerpt from the Argentina program documents (MEFP and associated sections).* ### 44. Staff assesses that Argentina continues to satisfy the four criteria for exceptional ### 1argea2026001 - 44. Staff assesses that Argentina continues to satisfy the four criteria for exceptional ### Exceptional Access Criteria (Summary of Staff Assessments) - CRITERION 1: The member is experiencing or has the potential to experience exceptional balance of payments pressures on the current account or capital account resulting in a need for Fund financing that cannot be met within the normal limits. - Staff judges this criterion as met. - Rationale: Argentina continues to face exceptional balance of payments pressures, reflecting very large FX debt service obligations amid still-negative NIR. - Even with expected timely and more sustainable international market access from decisive program implementation, the Fund’s exposure will need to remain above normal access limits for some time, alongside continued support from multilateral and bilateral creditors. - CRITERION 2: A rigorous and systematic analysis indicates that there is a high probability that the member’s debt is sustainable in the medium-term; where the member’s debt is considered sustainable but not with a high probability, exceptional access would be justified if financing provided from sources other than the Fund, although it may not restore sustainability with high probability, improves debt sustainability and sufficiently enhances the safeguards for Fund resources. - Staff judges this criterion as met. - Rationale: Under the proposed baseline, staff assesses that Argentina’s public debt remains sustainable in the medium term, but not with high probability. - Safeguards: Consistent with the Fund’s EA framework, staff assesses adequate safeguards would be in place to meet EA2. If adverse shocks materialize, sufficient restructurable FX debt to the private sector would potentially be available after program completion to improve debt sustainability and enhance safeguards for Fund resources. - Conditions: Assessment hinges on sustained implementation of the proposed fiscal consolidation path and broader policies and reforms to gradually reduce inflation, boost reserve coverage, further compress spreads, strengthen medium-term growth prospects, and harness energy and mining wealth. - CRITERION 3: The member has prospects of gaining or regaining access to private capital markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to the Fund. - Staff judges this criterion as met. - Evidence of regaining access: - Several issuances of local-law peso- and dollar-denominated sovereign bonds during 2025 and early 2026, including hard-dollar placements through scheduled primary auctions. - Three repo agreements between the BCRA and international banks. - External pressures eased after the 2025 midterm elections; BCRA daily purchase program helped rebuild reserves. - Sovereign spreads have narrowed and a credit rating upgrade has been awarded. - Corporates and provinces issued FX debt at record levels and at more favorable terms. - Recent IFI loan guarantees are facilitating cost‑effective commercial borrowing. - Remaining frictions: Authorities are working to resolve remaining arrears in line with the financial program. - Conditionality: Sustained implementation of the program—including commitment to the fiscal anchor, further refinements to the monetary and FX framework, and growth-enhancing reforms—and recent credit rating upgrades are expected to compress spreads, expand the investor universe, encourage repatriation of resident US dollar assets, and support stable international capital market access. Assessment remains subject to timing risks and global financial conditions. - CRITERION 4: The policy program of the member provides a reasonably strong prospect of success, including not only the member’s adjustment plans but also its institutional and political capacity to deliver that adjustment. - Staff assesses this criterion as met. - Political and institutional context: - 2025 midterm elections strengthened the administration’s mandate and improved prospects for policy continuity. - Government expanded representation in Congress, securing the one-third needed to sustain Presidential vetoes and approaching a majority—with allied parties—to pass key reforms. - Approval of the 2026 Budget (after two years without one), the Fiscal Innocence Bill, the Labor Modernization Law, and amendments to the Glacier Protection Law demonstrate governing capacity and willingness to build consensus. - Monetary/FX steps: Adjustments to the exchange rate band and the introduction of a daily reserve purchase program helped narrow spreads and improve market access prospects. - Program ownership: Stabilization gains over the past two years anchored on commitment to the fiscal anchor and deregulatory reforms underscore strong program ownership. - Risks: Maintaining social and political support requires targeted assistance and policies to mitigate reform-related adjustment costs, especially given recent weaknesses on the job creation front; risks from the global environment and Argentina’s socio-political complexities remain, and could be amplified ahead of next year’s Presidential elections. ### Enterprise Risks - Fund enterprise risks remain elevated. - Positive mitigants: - Sustained fiscal discipline, market-oriented reforms, and refinements to the monetary and FX policy frameworks are helping entrench stability and rebuild external buffers. - Government’s enhanced governing capacity since the 2025 midterm elections supports reform continuity. - Improved prospects for market access and longer-term capital inflows given energy, mining and agricultural opportunities. - Ongoing vulnerabilities: - Macroeconomic fragility: inflation is still high and reserve coverage is weak. - Significant near-term FX obligations and continued path to market access create financial risks for the Fund. - Policy implementation challenges and reform fatigue could emerge if disinflation, growth, and employment do not strengthen ahead of the 2027 Presidential elections. - Reputational risks if the Fund program is perceived as insensitive to social and employment conditions and short-term dislocation costs. - Risk mitigation: Program’s strong ownership, focus on reforms to secure market access, commitment to contingency plans, and intention to protect the most vulnerable. ### Staff Appraisal — Key Findings and Policy Recommendations - Achievements since end-2023: - Establishment and sustained implementation of a credible fiscal anchor. - Decisive reforms to deregulate and liberalize the economy, correct relative price misalignments, and ease restrictions, delivering a sharp decline in annual inflation (from triple to double digits), the first fiscal primary surpluses in years, and important FDI announcements. - Refinements to the monetary and FX framework supporting exchange rate flexibility and central bank balance sheet improvements. - Expanded and better targeted social support has substantially reduced poverty levels. - External buffers and vulnerabilities: - Progress slower in rebuilding external buffers; vulnerabilities remain and recent shock-related setbacks occurred. - Staff’s preliminary assessment: Argentina’s external position remains weaker than the level implied by medium-term fundamentals and desirable policies. - Early program delays and political uncertainties ahead of October midterm elections triggered large and rapid dollarization by residents, weakening external and domestic stability. - U.S. Treasury’s ESF provided unprecedented support, but net international reserves fell well short of program targets, disinflation stalled, and real GDP and employment growth slowed. - Policy implementation since 2025 midterms: - Recent refinements to the monetary and FX framework (enhanced exchange rate flexibility and a daily reserve purchase program) are helping rebuild external buffers and narrow sovereign spreads. - Structural reforms deepened; improved governance facilitated congressional approvals of major laws and the 2026 Budget. - Need for a balanced approach better balancing disinflation, external sustainability, and growth objectives to secure broad support. - Fiscal policy recommendations: - Fiscal anchor must remain the cornerstone; staff supports authorities’ commitment to maintaining a generally unchanged federal government primary surplus of about 1½ percent of GDP in 2026, consistent with their overall cash balance target. - Continued spending restraint needed (rationalizing subsidies, wages, and transfers to SOEs) to offset lower taxes and new congressional spending. - Medium-term priorities: (i) improve the simplicity, efficiency, and equity of the tax system; (ii) strengthen pension system sustainability; (iii) enhance the fiscal framework, institutionalize the fiscal rule, and better align fiscal discipline incentives at the subnational level. - Monetary policy recommendations: - Continue evolving the monetary framework to support disinflation with enhanced exchange rate flexibility. - Steps taken welcomed: clarification of operational targets, improvements in policy communication, and strengthened liquidity management. - Over time, as disinflation continues and financial markets deepen, move toward greater exchange rate flexibility and increased reliance on interest-rate-based policy tools and inflation as the nominal anchor. - Complement with steps to strengthen the central bank’s institutional framework and deepen local capital markets while mitigating FX and maturity mismatch vulnerabilities. - External buffers and market access: - Proactively rebuild reserves and secure stable market access remain priorities. - Maintain reserve purchase program; reserve targets should be exceeded as conditions permit. - Complement FX purchases with measures to access domestic and international capital markets to refinance near-term principal obligations and reduce debt vulnerabilities. - Broaden the investor base building on recent credit rating upgrades and re‑access international capital markets consistent with gradual reduction in exposure to the Fund and other senior creditors. - Structural reforms to boost growth and employment: - Deepen deregulation and opening of the economy; build on trade agreements and FDI announcements to unlock export potential in agriculture, energy and mining. - Strengthen independence of oversight institutions (including the statistical agency), enhance transparency in procurement and privatization, improve judicial effectiveness and anti-corruption frameworks. - Prioritize support for vulnerable and displaced workers. - Contingency planning: - Remain critical to manage rising volatility, with exchange rate flexibility as first line of defense. - Use current window to strengthen resilience ahead of next year’s presidential elections by rebuilding reserves and extending duration of near-term debt obligations. - Avoid over-reliance on official financing and currency appreciation for near-term disinflation purposes. - Medium-term: manage potential windfall from energy and mining effectively. - Program and approvals: - Staff supports completion of the Second Review under the Extended Arrangement under the Extended Fund Facility. - Staff supports authorities’ requests for (i) waiver of nonobservance given corrective actions and forward-looking commitments; and (ii) modification of performance criteria. - Staff recommends completion of the financing assurances review, noting Argentina’s continued good faith efforts to resolve external arrears and the need for creditor engagement consistent with LIA requirements. - Staff supports authorities’ request for extension of Board approval to maintain the exchange restrictions and MCPs identified in this report (Annex IV). - It is expected that the next Article IV consultation will take place on a 24-month cycle. ### Box 1 — Poverty Reduction: Progress and Challenges (Key Statistics and Drivers) - Overall progress: - Poverty declined from over 50 percent in H1:2024 to below 30 percent by Q3:2025. - Comparable improvements occurred in extreme poverty. - Real per‑capita incomes in the bottom quintile increased by about 33 percent between Q3:2023 and Q3:2025, compared with 26 percent in the top quintile. - Distributional and group impacts: - Declines particularly pronounced among households with children (over 20 percent) and those with informal sector workers (about 25 percent). - Around 40 percent of country’s poor population lives in the greater Buenos Aires area. - Large intergenerational inequities remain: poverty rates for households with children are roughly 25 p.p. higher than among households without children. - Poverty rates for households with informal workers are 10 percent higher than for households where all workers are employed in the formal market. - Contributions to poverty decline (approximate shares and impacts as presented): - Relative inflation effect: basic consumption basket rose 270 percent vs. headline inflation 307 percent; explains roughly 40 percent (7.3 p.p.) of the decline in the poverty headcount. - Labor income: contributed 42 percent of the total decline (7.5 p.p.). At lower end, driven by increase in the number of employed household members; at higher end, driven by stronger growth in earnings per worker. - Pensions: explain about 2 p.p. of the decline in poverty; smaller impact on extreme poverty. - Government transfers: account for about 6 percentage points of income growth in the bottom decile; played larger role in reducing extreme poverty (0.9 p.p.) than overall poverty (0.1 p.p.). Without government transfers, poverty in Q3:2025 would have been 2.7 p.p. higher and extreme poverty 3.5 p.p. higher. - Other non-labor incomes (including remittances and imputed housing income): account for about 6 percent (1.2 p.p.) of the decline in both poverty and extreme poverty. - Remaining challenges and priorities: - Sustaining gains requires continued disinflation and recalibration of the safety net with emphasis on worker retraining and targeted childcare support to ease care constraints and support labor-force participation. - Enhance employment among the poor to respond to structural transformation toward agriculture, mining, and energy, and geographic dispersion of poverty. *Source: IMF staff report excerpt.* ### Box 2. Key Elements of the Labor Market Reform ### Box 2. Key Elements of the Labor Market Reform ### Summary - The Labor Modernization Bill introduces legal changes aimed at supporting labor market flexibility and formal job creation as the economy opens. - The reform affects dismissal costs, work organization, collective bargaining arrangements, labor‑related litigation, and introduces temporary incentives for labor formalization. - The law also includes elements beyond labor issues, including tax incentives for certain sectors and a two-year Regime of Incentives for Medium-Sized Investments (RIMI). ### Key elements of the reform - Severance pay framework: - Redefines the severance calculation base by excluding non‑core wage components (such as the thirteenth salary, bonuses, tips, overtime, and performance‑related payments). - Introduces an explicit cap equivalent to three times the applicable collective‑agreement wage. - Establishes a statutory minimum floor set at 67 percent of salary (or one monthly wage). - Indexation and payment of severance awards: - Codifies a uniform statutory indexation rule for court‑awarded severance, updating amounts by inflation plus a fixed annual rate of 3 percent. - Replaces reliance on judicially determined update mechanisms. - Allows courts to authorize installment payments—up to six months for large firms and up to twelve months for SMEs. - Labor Assistance Fund (FAL): - Mandatory employer contributions to individual, non‑attachable accounts to prefund severance obligations. - Contribution rates set at 1 percent of payroll for large firms and 2.5 percent for SMEs. - Oversight by a market regulator. - Regime for Incentives for Formal Employment (RIFL): - Introduces a temporary one‑year reduction in employer social‑security contributions for newly hired or newly formalized workers transitioning from informality, self‑employment, or public employment. - Employee contributions remain unchanged. - Working time and work organization: - Expands flexibility by allowing daily working hours of up to twelve hours, subject to a mandatory twelve‑hour rest period. - Enables hour banks, compensatory time arrangements, and part‑time contracts below the statutory workday. - Collective bargaining structure: - Firm‑level or regional agreements would take precedence over sector‑wide agreements. - Limits automatic continuation of expired collective agreements. - Authorizes the executive to intervene in bargaining processes in cases of severe economic distortions. - Union financing: - Compulsory union dues are maintained for affiliated and non‑affiliated workers but are subject to a temporary cap of 2 percent of monthly wages for two years. - Mandatory employer‑chamber contributions are capped at 0.5 percent. - Digital platforms: - Platform workers are explicitly classified as independent contractors operating under service contracts rather than standard employment relationships. - Labor justice and litigation: - Court‑ or authority‑approved settlements are granted the force of final judgments. - Legal and expert fees are capped at 25 percent of awarded amounts, intended to reduce procedural uncertainty and litigation costs. ### Assessment and implementation caveats - The reform represents a major step toward improving labor market flexibility and incentives for formality, especially as the economy deregulates and opens to trade. - The ultimate impact depends on regulatory implementation and judicial interpretation, with full effects materializing gradually and over the medium term (see Selected Issues Paper, Chapter 4). *Source: Box 2. Key Elements of the Labor Market Reform, 1argea2026001* ### Box 7. BCRA’s Balance Sheet and Governance Structure, Future Challenges ### Box 7. BCRA’s Balance Sheet and Governance Structure, Future Challenges ### BCRA balance sheet: recent progress and composition - Since end-2023, the BCRA’s balance sheet has been strengthened, mainly on the liability side. - The Milei administration inherited a central bank where low-quality government securities had replaced foreign reserves as the dominant asset and peso remunerated liabilities were growing exponentially. - Early administration measures: - Financial repression (negative real interest rates) and strict capital controls reduced the stock of central bank peso securities in real terms. - During mid-2024, BCRA securities were replaced with short-term Treasury paper (LECAP and LEFIs) with the government assuming the interest costs of monetary policy. - Income and equity outcomes: - The BCRA’s comprehensive income became structurally positive as nominal yields on its assets far exceeded the carry cost of its liabilities, the bulk of which were unremunerated (the monetary base and government peso deposits). - The BCRA’s net equity position rose accordingly to about 5½ percent of 2025 GDP. - A dividend payment of about 2 percent of GDP was made in April 2025, also supported by fiscal improvements and the elimination of direct monetary financing of the budget. ### Net FX position and reserve dynamics - Vulnerabilities remain due to a deeply negative net FX position. - Reserve and liability details: - Early progress in rebuilding reserves stalled in late 2024, and reserve drains intensified during 2025 on account of political uncertainties, although a recovery is now underway. - Net FX reserves, excluding the new IMF program (a liability of the central government), currently stand at around negative US$10 billion. - FX assets are around US$45 billion. - Short-term liabilities more than offset FX assets and comprise: - Regulatory deposits of banks: US$18 billion - Swaps with the PBoC and BIS: about US$20 billion - Liabilities of the deposit guarantee fund: US$2 billion - The net FX position including liabilities with maturities beyond 12 months is lower, reflecting Repos and Bopreals issued to address the import payment backlog (about US$13 billion). ### Policy priorities to strengthen the balance sheet and reserves - Sustained improvements will require policies to encourage re-monetization and reserve accumulation. - A strengthening in money demand would permit unsterilized reserve accumulation and improve the government’s market access prospects, including to refinance repo obligations (issued by the BCRA to meet the FX debt service obligations). - New unrealized gains distributed to the government should only be used to recapitalize the BCRA, including through buybacks of non-tradable Treasury securities (NTTS). ### BCRA governance: achievements and further reforms needed - Progress made: - Steps taken to improve internal audit independence and quality, risk management capacity, and the information technology security framework. - Further work recommended: - Charter and institutional safeguards: - In line with international best practices, over time, the BCRA charter should be amended to strengthen the central bank’s autonomy and mandate. - Reforms should reinforce institutional safeguards that protect policy independence, clarify the central bank’s objectives, and enhance accountability and transparency. - Strengthened governance arrangements would help reduce vulnerabilities to fiscal dominance, support effective oversight, and underpin policy credibility. - Financial reporting and accounting standards: - Financial reporting should be further aligned with international standards. - While transparency has improved, including through adequate valuation practices for government securities and risk disclosures, further progress would help ensure the consistent application of accounting policies and strengthen the credibility of the BCRA’s financial statements. - A transition to International Financial Reporting Standards (IFRS), with the use of Argentine Professional Accounting Standards (NCP) as an interim framework, would support sustainable transparency. *Source: Box 7. BCRA’s Balance Sheet and Governance Structure, Future Challenges (IMF).* ### Box 9. Assessment of Economic Governance and Anti-Corruption Frameworks ### Box 9. Assessment of Economic Governance and Anti-Corruption Frameworks ### Recent Reforms - Since December 2023, the authorities have advanced an ambitious reform agenda focused on fiscal consolidation, deregulation, and scaling back the state’s economic footprint. - Measures enacted or initiated include: - eliminating the fiscal deficit; - streamlining social programs by reducing intermediaries; - gradually lifting foreign exchange controls and multiple exchange rates; - repealing extensive regulations; - simplifying market entry and trade procedures; - curtailing licensing and discretionary approvals; - reducing firm–state interaction points associated with bribery risks. - Outcome of reforms: - increased competition and a shift toward a more rules‑based and even‑handed regulatory environment; - lowered discretionary spending and administrative controls that historically facilitated rent seeking and corruption by vested interests. - Supporting measure noted: Digitalization of public services has supported this effort. ### Remaining Challenges - Corruption perception and institutional indicators: - Argentina scored 36 out of 100 in the Corruption Perception Index for 2025 as reported by Transparency International. - The U.S. Investment Climate Statement and other indicators point to persistent challenges. - Preventive anticorruption frameworks weaknesses: - asset declaration regimes characterized by limited verification, low transparency, delayed publication, and uneven enforcement; - conflict of interest rules constrained by porous rules and weak enforcement capacity. - Accountability and rule‑of‑law concerns: - perceived limited judicial independence and politicization remain concerns; - international assessments and domestic observers point to delays in high‑profile cases and limited accountability for senior officials; - underscores need to strengthen prosecutorial independence and judicial transparency. - Specific domestic interlocutor recommendations (as cited): - reinforce the independence of accountability institutions—including the Anticorruption Office, Financial Intelligence Unit (UIF), Ombudsperson, and the judiciary; - improve access‑to‑information and procurement regimes; - reduce reliance on executive decrees, which could weaken oversight. ### Policy Priorities - Identified priorities to strengthen governance and anticorruption frameworks: - strengthen judicial independence and accountability institutions; - improve enforcement of asset‑declaration regimes and conflict‑of‑interest rules; - enhance transparency in procurement and privatization; - ensure regulatory predictability. - Legislative option highlighted: - some objectives could be achieved by strengthening the Public Ethics Law. - Expected payoff: - progress in these areas will strengthen investor confidence and the gains from economic reform efforts. *Source: Box 9. Assessment of Economic Governance and Anti-Corruption Frameworks (excerpt).* ### Annex I. External Sector Assessment ### Annex I. External Sector Assessment ### Overall Assessment and Potential Policy Responses - Overall Assessment: - The external position in 2025 was weaker than the level implied by medium-term fundamentals and desirable policies. - Assessment reflects very precarious reserve coverage and the absence of sustainable market access against the backdrop of large FX debt obligations. - Since end-2025, record agricultural exports and renewed portfolio inflows have led to an incipient reserve recovery as well as some real currency appreciation. - The external assessment continues to be subject to exceptionally high uncertainty.1/ - Potential Policy Responses: - A more balanced stabilization program with greater emphasis on external stability is required to rebuild reserves, sustain a gradual disinflation process, and durably regain access to international capital markets. - Complement the strong fiscal anchor with sustained implementation of structural reforms to boost exports and attract investment. - Specific measures: - Greater exchange rate flexibility. - Channel commodity export windfalls toward reserve accumulation. - Transition toward a more open and competitive economy with reduced barriers in product, labor, and external markets to improve productivity and strengthen competitiveness. - Easing remaining FX restrictions as conditions permit, while macroprudential regulations contain FX mismatches. - Continue development of capital markets and formalization of residents’ U.S. dollar holdings. - Continue reduction in export duties. ### Foreign Asset and Liability Position and Trajectory - Background (2025 flows and positions): - Household sector net accumulation of assets abroad in 2025: US$30 billion, 2.3 percent of GDP (pre-election uncertainties offsetting earlier tax amnesty inflows). - Corporates increased their net exposure abroad: around US$55 billion, 4.2 percent of GDP including valuation gains, mainly direct investment and other portfolio/investment flows. - NIIP declined from US$105.4 billion (16.2 percent of GDP) in 2023 to around US$48 billion (7.1 percent of GDP) at end-2025. - Public sector external exposure generally unchanged since end-2023, with increases in official debt liabilities matched by lower bondholder debt and high gross reserve assets. - Assessment: - External vulnerabilities remain despite a positive NIIP reflecting private sector holdings of external low-yielding assets. - Government’s foreign position remains firmly negative and high-yielding; central bank’s net reserve asset position remains deeply negative, generally unchanged since end-2023. - Key 2025 figures (% GDP): - NIIP: 7.1 - Gross Assets: 72.4 - Debt Assets: 40.8 - Gross Liab.: 65.3 - Debt Liab.: 40.1 ### Current Account - Background: - CA averaged about negative 0.2 percent of GDP over 2020 to 2024; reached a surplus of 1 percent in 2024 largely due to investment compression. - In 2025, current account moved to a deficit of 1.1 percent of GDP, consistent with economic recovery and demand. - Drivers in 2025: goods export volumes up about 10 percent; imports rose 30.5 percent; further deterioration in services balance. - Projected 2026 CA: about 0.8 percent deficit (narrowing), supported by tight fiscal policy, enhancements to monetary and FX regime, and improvements in energy and mining balance. - Projected medium-term CA path consistent with rebuilding reserves to 100 percent of the ARA metric. - Assessment: - 2025 EBA cyclically adjusted CA balance estimated at around -1.8 percent of GDP; estimated EBA CA norm 0.7 percent of GDP; implying an EBA CA gap in the range of (-1.5 to -3.5) percent of GDP. - Significant portion of the gap is unexplained residual reflecting transitional factors not captured by EBA: longstanding structural competitiveness constraints; release of pent-up import demand (capital goods and investment inputs) after easing of current and capital account restrictions. - Structural constraints expected to diminish as reform agenda advances; staff-assessed CA norm subject to significant uncertainty. - Key 2025 figures (% GDP): - CA: -1.1 - Cycl. Adj. CA: -1.8 - EBA Norm: 0.7 - EBA Gap: -2.5 - Staff Adj.: 0.0 - Staff Gap: -2.5 ### Real Exchange Rate (REER) - Background: - Average REER modestly appreciated by 3 percent between 2024 and 2025. - REER weakened by 16 percent between December 2024 and December 2025, supported by greater exchange rate flexibility amid increased political uncertainties. - REER appreciated in Q1 2026 on record agricultural/energy exports and stronger capital inflows despite FX purchases by the BCRA. - Price‑based and wage‑based REER measures followed similar patterns; wage‑based indices adjusted with a lag, likely reflecting a substantial narrowing in profit margins. - Assessment: - Staff-assessed CA gap for 2025 implies an average REER gap of 9.5-22.0 percent, with a midpoint 15.8 percent, based on a semi‑elasticity of 0.16. - Estimates broadly consistent with EBA REER models and longer-term REER trends.2/ - Considering REER dynamics since April 2025, the REER gap is estimated to have narrowed as of end-2025 compared to the annual average, although recent appreciation amid very strong FX inflows has eroded these gains. - Over the medium term, a stronger REER could be justified if ongoing structural reforms deliver sustained productivity and competitiveness gains. - Notes: - 2/ EBA REER index model suggests average REER gap about 14.5 percent; EBA REER level model estimates gap around 18.6 percent. ### Capital and Financial Accounts: Flows and Policy Measures - Background (2025 flows and measures): - Net capital inflow in 2025: about US$11.4 billion (1.7 percent of GDP), reversing 2024’s small net outflow. - Gross liabilities reached 5.5 percent of GDP, largely from IMF and multilateral disbursements and corporate borrowing, with smaller portfolio debt issuance. - Net asset acquisition by residents: 3.8 percent of GDP; reserve assets up by US$7.2 billion. - Trade and capital account restrictions gradually eased since early 2024, with temporary tightening ahead of October midterm elections. - Post-elections, market confidence improved; starting January 2026, corporates can freely repatriate dividends from 2025 investments onward. - Assessment: - Careful easing of remaining exchange rate restrictions and capital flow management measures, along with tight macroeconomic policies and greater exchange rate flexibility, is needed to support reserve accumulation, attract foreign investment, and facilitate sustained access to international capital markets. - Complementary macroprudential policies needed to ensure sustainability of capital inflows. - Risks to capital inflows tilted to the downside amid rising global geopolitical tensions and a more challenging external financing environment. ### FX Intervention and Reserves Level - Background (reserves and intervention): - NIR fell to -$11.7 billion (at current rates) by end-2025; well below end-2024 levels (-$2.4 billion) and similar to end-2023 levels (-$11.2 billion); reflecting reserve sales ahead of midterm elections triggered by resident FX hedging and dollarization. - GIR rose by about $10.9 billion in 2025 to $27.5 billion at end-December, reflecting IMF disbursements and post-election normalization; increased by $4.4 billion through April 21, 2026 to US$31.9 billion. - Adjustments to FX framework and introduction of a reserve purchase program resulted in BCRA purchasing about $6.5 billion year-to-date; NIR at program rates increased by about US$4.8 billion. - Bank FX deposits have risen about US$16.1 billion, supporting improvements in GIR.3/ - Assessment: - Reserve coverage remains very inadequate. - GIR estimated at 38.1 percent of the standard ARA EM metric (and 41.2 percent of the CFM-adjusted metric) as of end-2025. - Sustained efforts to organically rebuild reserves essential to secure access to international capital markets on more favorable terms and to manage shocks amid elevated global uncertainty and volatile external financing conditions. - Notes: - 3/ Gross reserve assets exclude the inactivated portion of the US$13 billion bilateral swap with the PBoC. *Source: Fund staff.* ### 1. Gross federal debt (DSA perimeter) (1=2+3)367.9 478.7 466.2154.684.780.3-12.5 ### 1. Gross federal debt (DSA perimeter) (1=2+3) ### Debt stocks and composition (levels in US$ bn; percent of GDP in table context) - Gross federal debt (DSA perimeter) (1=2+3): 367.9 478.7 466.2 154.6 84.7 80.3 -12.5 - 2. Federal debt (excl. intra-public sector holdings): 220.0 288.4 283.9 92.5 51.0 48.9 -4.5 - 2a. FX debt: 173.8 173.2 189.1 73.0 30.6 32.6 16.0 - IMF: 40.6 40.6 57.3 17.0 7.2 9.9 16.7 - Official Sector: 38.3 37.0 40.8 16.1 6.5 7.0 3.8 - Private Sector: 92.5 91.8 86.9 38.9 16.2 15.0 -4.9 - Holdouts and finalized litigation: 2.4 3.8 4.2 1.0 0.7 0.7 0.4 - 2b. LC debt: 46.2 115.3 94.8 19.4 20.4 16.3 -20.5 - 3. Intra-public sector Treasury debt 2/: 147.9 190.3 182.3 62.1 33.7 31.4 -8.0 - 4. BCRA liabilities 3/: 45.6 14.6 19.0 19.2 2.6 3.3 4.4 - 4a. FX debt 3/: 10.3 14.4 18.2 4.3 2.5 3.1 3.8 - Bopreal: 0.0 9.3 7.3 0.0 1.6 1.3 -2.0 - Repo agreements: 0.0 0.0 3.0 0.0 0.0 0.5 3.0 - BIS swap: 2.2 0.0 2.5 0.9 0.0 0.4 2.5 - PBoC swap: 5.1 4.9 5.1 2.1 0.9 0.9 0.2 - Other: 3.1 0.2 0.3 0.0 0.0 0.1 0.1 - 4b. LC debt: 35.4 0.1 0.7 14.9 0.0 0.1 0.6 - 5. Consolidated public sector debt (5=2+4): 264.4 303.0 302.9 111.1 53.6 52.1 -0.1 - 5a. Consolidated FX debt (5a=2a+4a): 184.1 187.6 207.4 77.4 33.2 35.7 19.8 - 5b. Consolidated LC debt (5b=2b+4b): 80.3 115.5 95.3 33.7 20.4 16.4 -19.9 Memorandum items (levels as presented) - Net International Reserves plus IMF disbursements: -8.5 -2.4 2.6 5.0 - Official Debt/Total Federal FX Debt (percent): 45.4 44.8 51.8 7.1 - FX Debt/Total Public Sector Debt (percent): 69.3 61.9 68.5 6.6 Notes from coverage and definitions - 1/ Debt based on data provided by the authorities and estimated using end-of-period exchange rates. Debt-to-GDP ratio is based on average period GDP. The debt stock is higher than the ones included in MECON's monthly debt reports because they include i) capitalized interest payments until maturity, ii) holdouts, and iii) claims related to the finalized London litigation case on the GDP warrants. - 2/ Public sector includes the central bank (BCRA) and the social security fund (FGS). - 3/ Includes Bopreals (not used for repo collateral), repo agreements, and the PBoC and BIS swap lines, and other small FX liabilities. ### Projections, macro-financing assumptions, and fiscal framework - Under baseline policy assumptions, public debt projections and key macro assumptions: - Gross federal debt is expected to fall from around 80 percent of GDP in 2025 to about 54 percent by 2031. - Consolidated public sector debt is projected to fall from around 52 percent of GDP in 2025 to below 30 percent of GDP by 2031. - The primary surplus is projected to stabilize at around 2¼ percent of GDP by 2029. - Potential real GDP growth reaching 3 percent annually over the medium term (compared to an average of zero percent over the past decade). - Projections assume principal payments on FX debt (to the IMF and private creditors) are refinanced through issuance in the markets of foreign-currency debt under both local and foreign law, while FX interest payments are covered mainly by primary surpluses—implying no increase in external indebtedness. - Financing assumptions (Box 1, key figures): - Real GDP growth: 3.5 percent in 2026, converging toward 3 percent over the medium term. - Inflation (eop): around 25 percent in 2026; annual inflation expected to reach single digits by 2028. - Primary fiscal surplus: 1.4 percent of GDP in 2026; converge to 2.3 percent of GDP by 2029. - Gross international reserves assumed to recover from around 40 percent of the ARA metric at end-2025 to around 100 percent by 2030. - External official financing (excl. IMF) disbursements (USD billions): 3.2 4.6 5.2 5.2 5.2 5.2 (for 2026–2031 as table shows) - Net financing (USD billions): 0.3 1.6 1.9 2.1 2.5 2.5 - Foreign-law FX bond issuance and syndicated loans backed by IFIs — Issuance (USD billions): 5.4 8.0 10.0 12.0 12.0 12.0; Spread (basis points): 500 450 400 350 350 350; Maturity (years): 7 7 7 7 7 7; Grace period (years): 3 3 3 3 3 3 - Domestic-law FX bond issuance — Issuance (USD billions): 5.1 5.1 7.1 11.0 10.9 13.1; Nominal interest rate (percent): 6.0 6.0 6.0 6.0 6.0 6.0 - Peso Market Financing — Real Interest Rate (percent): 7.1 4.5 4.0 4.0 4.0 4.0 - Sovereign spreads projected to fall from around 500 bps in 2026 to 350 bps over the medium term. - Domestic-law FX bond issuances would amount to about US$5 billion in 2026; IFI-backed commercial loans would total US$4 billion in 2026; foreign-law FX bond issuance rising to about US$11 billion per year in 2027-31. ### Risk assessment, fan charts, and contingent liabilities - GFN Financeability Module assessment: - Baseline GFNs are projected to remain high and average around 18 percent of GDP over the 2026–31 period (around 11 percent of GDP for debt held by the private and official sector). - Despite improved fundamentals since end-2023, risks remain moderate due to low reserve buffers, unstable market access, exposure to frequent shocks, shallow banking system (assets of about 35 percent of GDP), and shallow capital markets. - Vulnerabilities partly mitigated by: (i) Treasury peso deposits at the BCRA and Banco Nacion; (ii) large share of debt held by other public sector entities (not subject to rollover risks); and (iii) large share of FX debt from IFIs with more favorable terms. - Debt fanchart and long-term fan chart: - Probability of debt stabilization under the baseline is around 99 percent for the medium term; a long-term fan chart ending in 2035 shows probability above 97 percent. - Elevated uncertainty remains as proxied by the width of the fanchart; reducing uncertainty depends on steady improvements in monetary and FX framework. - Contingent liability scenario: - Illustrative contingent liability shock simulates a one-off debt materialization of 6 percent of GDP (encompassing more than total provincial debt and combined potential compensation payments from ongoing sovereign debt litigation cases). - Under the contingency scenarios, debt dynamics remain close to the baseline, but agile policymaking and additional macro adjustments would be necessary if contingent liabilities materialize. - Non-bailout approach on provincial debts and commitment to resolving pending litigation should be maintained. ### Policy implications and recommended actions (from text) - Sustain the zero overall cash balance fiscal anchor and adopt fiscal reforms to support further increases in the primary surplus. - Shift toward peso instruments that record the interest bill above the line as market access stabilizes. - Continue enhancements to the monetary and FX policy regime and deepen structural reforms to support disinflation, reserve accumulation, and growth. - Reduce rollover risks through sustained fiscal efforts, agile and well-communicated debt management, consistent and predictable reserve accumulation strategy, and improved monetary policy framework. - Continue efforts to improve maturity and structure of peso debt and decisive reserve accumulation to reduce sovereign spreads and gradually reduce exposure to the Fund and other official creditors. - Maintain commitment to resolving debt litigation and managing contingent liabilities without bailouts for provinces; be prepared for additional macroeconomic policy adjustments if contingent liabilities materialize. *Sources: Argentine authorities and Fund staff estimates.* ### 5. Debt consolidation across sectors: ### 5. Debt consolidation across sectors ### Coverage, recording, and exclusions - Commentary: The coverage in this SRDSA is gross federal (central government) debt held by the private, official and public sectors. - Exclusions explicitly noted: - GDP warrants (except those with finalized litigation). - Debt of the provinces or municipalities. - Debt of the central bank. - Staff judgment: Staff does not judge the exclusion of provincial debt as a significant contingent liability risk, as demonstrated by the federal government's non-bailout approach to the recent provincial debt restructuring. - Central bank instruments excluded (for DSA purposes) because they are below de-minimis thresholds or consistent with reserve plans: - Central bank's FX swaps (amount lower than the de-minimis threshold of 1 percent of GDP). - Central bank’s repo agreements with international banks and FX bonds (BOPREALs). - Reporting/recording notes: - CG=Central government; GG=General government; NFPS=Nonfinancial public sector; PS=Public sector. - Valuation distinctions preserved: Nominal value, Face value, Market value; cash basis vs Non-cash basis (includes accrual recording, commitment basis). - IPSGSs defined as Insurance, Pension, and Standardized Guarantee Schemes. ### Debt structure, maturity, and instrument composition (key findings) - Foreign-currency denominated debt will continue to dominate over the long term. - Rollover risks mitigated by: - Large share of FX debt held by IFIs. - Large share of overall debt held by the intra-public sector (including non-marketable instruments). - Debt management strategy assumptions: - Maturity of new debt projected to increase over time. - Share of fixed-rate instruments projected to increase. - Projected residual maturity: 4.3 years. ### Baseline scenario projections (selected exact figures from Table 6) - Public debt (Percent of GDP): - Est. 2025: 80.3 - 2026: 73.2 - 2027: 70.7 - 2028: 65.4 - 2029: 61.2 - 2030: 57.3 - 2031: 53.9 - 2032: 51.1 - 2033: 48.4 - 2034: 45.6 - 2035: 42.8 - 2036: 37.9 - Change in public debt (Percent of GDP): - 2025: -4.3 - 2026: -7.1 - 2027: -2.6 - 2028: -5.3 - 2029: -4.2 - 2030: -3.9 - 2031: -3.4 - 2032: -2.8 - 2033: -2.8 - 2034: -2.7 - 2035: -2.9 - 2036: -4.9 - Contribution of identified flows (Percent of GDP): - 2025: -13.7 - 2026: -11.3 - 2027: -7.2 - 2028: -5.5 - 2029: -4.5 - 2030: -3.9 - 2031: -3.6 - 2032: -3.5 - 2033: -3.5 - 2034: -3.5 - 2035: -3.6 - 2036: -3.7 - Primary deficit (Percent of GDP): - 2025: -1.4; 2026: -1.4; 2027: -1.8; 2028: -2.0; 2029–2036: -2.3 (each year) - Noninterest revenues (Percent of GDP): 2025: 23.6; 2026: 23.9; 2027: 24.4; 2028: 24.7; 2029–2036: 25.4 (each year) - Noninterest expenditures (Percent of GDP): 2025: 22.2; 2026: 22.5; 2027: 22.6; 2028: 22.6; 2029–2036: 23.1 (each year) - Automatic debt dynamics (Percent of GDP): 2025: -12.3; 2026: -9.9; 2027: -5.4; 2028: -3.4; 2029: -2.2; 2030: -1.6; 2031: -1.3; 2032: -1.2; 2033: -1.2; 2034: -1.2; 2035: -1.3; 2036: -1.4 - Real interest rate and relative inflation (Percent): 2025: -10.4; 2026: -7.2; 2027: -2.6; 2028: -0.9; 2029: 0.1; 2030: 0.2; 2031: 0.4; 2032: 0.4; 2033: 0.3; 2034: 0.2; 2035: 0.1; 2036: -0.1 - Real interest rate (Percent): 2025: -21.6; 2026: -16.4; 2027: -7.3; 2028: -3.5; 2029: -1.8; 2030: -1.5; 2031: -1.3; 2032: -1.2; 2033: -1.1; 2034: -1.1; 2035: -1.1; 2036: -1.3 - Relative inflation (Percent): 2025: 11.2; 2026: 9.3; 2027: 4.8; 2028: 2.6; 2029: 1.8; 2030: 1.8; 2031: 1.7; 2032: 1.6; 2033: 1.5; 2034: 1.3; 2035: 1.2; 2036: 1.1 - Real growth rate (percent): 2025: -3.5; 2026: -2.7; 2027: -2.8; 2028: -2.6; 2029: -2.2; 2030: -1.9; 2031: -1.7; 2032: -1.6; 2033: -1.5; 2034: -1.4; 2035: -1.3; 2036: -1.3 - Gross financing needs (Percent of GDP): - 2025: 29.8; 2026: 22.4; 2027: 17.0; 2028: 19.1; 2029: 16.9; 2030: 15.9; 2031: 16.5; 2032: 15.5; 2033: 15.6; 2034: 15.3; 2035: 13.9; 2036: 12.3 - Of which: debt service (Percent of GDP): 2025: 31.2; 2026: 23.8; 2027: 18.8; 2028: 21.2; 2029: 19.2; 2030: 18.2; 2031: 18.8; 2032: 17.8; 2033: 17.9; 2034: 17.6; 2035: 16.2; 2036: 14.6 - Currency composition of gross financing needs (Percent of GDP): - Local currency: 2025: 28.6; 2026: 19.1; 2027: 14.4; 2028: 16.0; 2029: 12.8; 2030: 12.2; 2031: 10.5; 2032: 9.8; 2033: 10.0; 2034: 10.3; 2035: 9.9; 2036: 9.2 - Foreign currency: 2025: 2.6; 2026: 4.7; 2027: 4.4; 2028: 5.2; 2029: 6.4; 2030: 6.0; 2031: 8.3; 2032: 8.0; 2033: 8.0; 2034: 7.3; 2035: 6.3; 2036: 5.4 - Memo macro variables: - Real GDP growth (percent): 2025: 4.4; 2026: 3.5; 2027: 4.0; 2028: 3.8; 2029: 3.5; 2030: 3.2; 2031–2036: 3.0 (each year) - Inflation (GDP deflator; percent): 2025: 39.4; 2026: 30.2; 2027: 15.6; 2028: 9.5; 2029–2036: 7.5 (each year) - Nominal GDP growth (percent): 2025: 45.2; 2026: 34.9; 2027: 20.1; 2028: 13.7; 2029: 11.3; 2030: 10.9; 2031: 10.8; 2032: 10.8; 2033: 10.8; 2034: 10.8; 2035: 10.8; 2036: 10.8 - Effective interest rate (percent): 2025: 1.6; 2026: 2.6; 2027: 3.6; 2028: 3.9; 2029: 4.5; 2030: 4.7; 2031: 4.9; 2032: 5.1; 2033: 5.0; 2034: 5.0; 2035: 4.7; 2036: 4.2 - Commentary: Public debt is projected to decline over the long term, reflecting the baseline assumptions of strong adherence to the fiscal anchor of a zero overall deficit. The large residual in 2025-27 is explained by valuation changes, including compensation of inflation-linked bonds and capitalized interest payments. Over time, effective interest rate is projected to increase with easing of FX controls and refinancing of zero-coupon bonds with instruments recording interest payments. ### Medium-term risk analysis (selected exact figures from Table 7) - Debt fanchart module: - Fanchart width (percent of GDP): 71.5 - Probability of debt non-stabilization (percent): 1.0 - Terminal debt-to-GDP x institutions index: 38.2 0.8 - Debt fanchart index (DFI): 1.9 - Risk signal: Moderate - Gross Financing Needs (GFN) module: - Average baseline GFN (percent of GDP): 18.0 6.1 - Initial Banks' claims on the gen. govt (pct bank assets): 24.3 7.9 - Change in banks' claims in stress (pct banks' assets): 7.2 2.4 - GFN financeability index (GFI): 16.4 - Risk signal: Moderate - Medium-term index: Risk signal: 5/ Final assessment: Prob. of missed crisis, 2026-2031, if stress not predicted: 27.3 pct.; Prob. of false alarms, 2026-2031, if stress predicted: 17.0 pct. - Staff assessment commentary: Medium-term risks assessed as moderate, as debt-to-GDP ratio is projected to decline over the medium term in the context of a strong adherence to the fiscal anchor and more stable macroeconomic conditions. Elevated uncertainty remains. ### Decomposition of public debt by creditor (Table 8, exact figures for 2025) - Debt Stock (end of period) totals (In US$ bn; Percent total debt; Percent GDP): - Total: 462.3; 100.0; 79.6 - External: 153.5; 33.2; 26.4 - Multilateral creditors: 95.0; 20.5; 16.4 - IMF: 57.3; 12.4; 9.9 - World Bank: 12.2; 2.6; 2.1 - CAF: 4.8; 1.0; 0.8 - IADB: 18.7; 4.1; 3.2 - FONPLATA: 0.6; 0.1; 0.1 - BIE: 0.2; 0.0; 0.0 - BCIE: 0.9; 0.2; 0.2 - Other Multilaterals: 0.2; 0.0; 0.0 - OFID: 0.1; 0.0; 0.0 - IFAD: 0.0; 0.0; 0.0 - Bilateral Creditors: 3.1; 0.7; 0.5 - Paris Club: 1.0; 0.2; 0.2 - Non-Paris Club: 2.1; 0.5; 0.4 - o/w: China: 1.9; 0.4; 0.3 - T-Bills: 0.2; 0.1; 0.0 - Bonds: 55.0; 11.9; 9.5 - Commercial creditors: 0.2; 0.0; 0.0 - Domestic: 308.8; 66.8; 53.2 - T-Bills: 117.5; 25.4; 20.2 - Bonds: 185.4; 40.1; 31.9 - Loans: 5.9; 1.3; 0.0 - Note: Debt coverage is the same as in the DSA, except for holdouts and litigations related to the London GDP warrant case (totalling about US$4 billion), which are included in the DSA but not in this table. ### FX Debt Service, 2026-27 (Table 9, exact US$ billion figures) - Total FX debt service: - 2026: 24.8; 2027: 32.3; Total: 57.1 - Principal: 2026: 15.6; 2027: 23.3; Total: 38.9 - Interest: 2026: 9.1; 2027: 9.0; Total: 18.2 - By creditor group (2026 / 2027 / Total): - Government: 18.6; 25.0; 43.6 - Bondholders 1/: 8.9; 11.9; 20.8 - Principal: 5.4; 8.4; 13.9 - Interest: 3.5; 3.5; 7.0 - IMF: 4.5; 7.8; 12.3 - Principal: 1.1; 4.4; 5.6 - Interest: 3.4; 3.4; 6.7 - Other IFIs: 4.3; 4.3; 8.6 - Principal: 2.1; 2.3; 4.4 - Interest: 2.1; 2.0; 4.2 - Bilaterals: 0.9; 0.9; 1.8 - Principal: 0.8; 0.7; 1.5 - Interest: 0.2; 0.1; 0.3 - BCRA: 6.2; 7.3; 13.5 - Bopreals: 2.2; 2.2; 4.4 - Repos: 1.4; 5.2; 6.6 - PBoC swap: 0.0; 0.0; 0.0 - BIS swap: 2.5; 0.0; 2.5 - Memo items: - Total, less Fund and other IFI disbursements: 2026: 19.7; 2027: 25.9; Total: 45.6 - Fund disbursements: 1.9; 1.7; 3.6 - Other official disbursements: 3.2; 4.6; 7.8 - Footnote: 1/ Assumes the issuance of US$2 bn of Bonares 2027. ### Risk Assessment Matrix — Selected risks and recommended policy responses - Global Risks - Geopolitical Tensions and Intensification of Conflicts - Likelihood: High; Impact if Realized: High - Recommended policy response: - Allow the exchange rate to act as a shock absorber. - Take advantage of associated windfall from oil exports to accelerate reserve accumulation. - Tighten the fiscal stance, including faster subsidy rationalization and streamlined transfers to provinces and SOEs. - Sustain implementation of structural reforms to attract investment. - Commodity Price Volatility - Likelihood: High; Impact if Realized: High - Recommended policy response: - Improve targeting of social assistance while avoiding delays in adjusting subsidies and fuel excises. - Tighten monetary and liquidity conditions as needed to prevent second-round effects and anchor expectations. - Trade-related Risks - Protectionism and trade tensions - Likelihood: Medium; Impact if Realized: Medium - Recommended policy response: - Advance external sector reforms: gradually reduce trade tariffs, streamline procedures, and implement new free trade agreements. - Enhance competitiveness through exchange-rate flexibility, continued reserve accumulation, and structural reforms. - Domestic Risks - Political Uncertainty (ahead of 2027 Presidential elections) - Likelihood: Medium; Impact if Realized: High - Recommended policy response: - Reinforce policy credibility through strict adherence to the fiscal anchor. - Continue strengthening the monetary framework and accelerate FX reserve accumulation. - Social Discontent and Reform Fatigue - Likelihood: Medium; Impact if Realized: High - Recommended policy response: - Strengthen social protection frameworks to shield the most vulnerable while sustaining reform momentum. - Improve governance and transparency, deploy active labor market policies, and maintain a competitive real exchange rate (including by accelerating reserve purchases). *Source: IMF staff estimates and projections as presented in the chapter "5. Debt consolidation across sectors."* ### Annex IV. Foreign Exchange Regime ### Annex IV. Foreign Exchange Regime ### Key changes since April 11, 2025 - Argentina introduced additional measures after the significant FX regime liberalization announced on April 11, 2025, as part of the EFF program. - Ahead of IMF Executive Board approval, Argentina effectively lifted, with respect to resident individuals, the complex system of exchange controls (“cepo”) mostly introduced between September 2019 and December 2023, and substantially eased access to foreign exchange for firms. - Since the First Review (completed on July 31), five notable changes to FX access were introduced: - (i) September 2025: FX access broadened for residents purchasing FDI held by nonresidents under certain conditions (Com. “A” 8331, September 18, 2025). - (ii) September 2025: a one-way cross-restriction reintroduced preventing resident individuals from purchases of securities settled in FX (accessing the MEP or CCL) within 90 days of accessing the official market (MULC) (Com. “A” 8336, September 26, 2025). - (iii) December 2025: new methodology for calculating the reference rate announced, replacing the longstanding method established in Communication “A” 3500 (Com. “A” 8359, December 4, 2025). - (iv) January 2026: FX access eased to refinance securities-related liabilities with debt (Com. “A” 8390, January 22, 2026). - (v) April 2026: further changes including exemptions to the surrender requirement for natural persons and changes to certain other exchange controls (Com. “A” 8417 of April 9, 2026). ### Resident individuals — current access and restrictions - Virtually all FX restrictions for current international transactions by resident individuals have been eliminated following April 11, 2025 reforms. - Key elements of the new regime: - The previous cap of $200 per month on purchase of FX in the official market removed if the individual is making the FX purchase with a debit from a local financial institution. - If the transaction is made with cash in local currency, the limit of $100 per month remains in place along with a requirement to attest that the applicable requirements have been met. - Restrictions on access to the official FX market by individuals receiving certain social benefits (e.g., participants in the pension buyback scheme, debtors to ANSES or SIPA, or natural gas subsidies) have been removed. - Previous limitations on access for invisible transactions (savings, wages, salaries, family remittances, medical expenses, educational expenses) and other current account transfers have been eliminated, with no justification needed. - September 2025 reintroduction of a one-way cross-restriction: when accessing the official market, resident individuals must attest in a sworn affidavit that they will not access the MEP or CCL, whether directly or indirectly or on behalf of third parties, for the following 90 consecutive days. This one-way restriction does not limit access to the official FX market following prior access to the MEP or CCL within the preceding 90 days. - April 9, 2026: a new cross-restriction introduced applicable to individuals transferring U.S. dollars to bank accounts or brokers out of the country, preventing them, for the following consecutive 90 days, from purchasing securities with settlement in foreign currency except those acquired through primary auction (Com. “A” 8417). ### Resident firms — payments for imports - From April 14, 2025, most FX restrictions on payment for imports were eliminated or eased: - The 30-day delay for access to the official FX market for goods imports reduced to zero; FX may be obtained as of the day of customs entry or arrival of the goods at a port in Argentina. - For MSMEs, access may be provided on the day of clearance at the port of origin before arrival of goods in Argentina. - For services, FX may be accessed in the official market to make payments on the day of the provision of the service instead of 30 days after; for services between related parties the wait was reduced from 180 to 90 days. - For capital goods, advance payment may be made up to 30 percent of the FOB value of the goods, an additional 50 percent from the date of clearance at the port of origin, and the remainder from the date of arrival in Argentina. - Except as noted, restrictions on access for advance payments for imports of goods and services remain in place. ### Dividends, profits, and repatriation/surrender regime - Communication “A” 8226 (April 11, 2025) authorized access to the official FX market for transfers abroad of new dividends realized in regular and audited annual financial statements for fiscal years beginning on or after January 1, 2025. - The rule does not cover backlog unpaid dividends; FX access for payment of dividends realized prior to January 1, 2025 continues to be restricted except with BCRA authorization (Communication “A” 8191), which is routinely withheld. - Argentina has sought to clear backlogs (importers’ debt and stock of dividends) by issuing dollar-denominated instruments (Bopreal). - April 14, 2025: Decree 269 repealed the export incentive scheme (“dollar blend”) that allowed exporters to settle up to 20 percent of export proceeds in the securities market (CCL or MEP) and the remainder in MULC; with repeal, all FX proceeds must now be surrendered to the MULC. The previous scheme was characterized as an 80-20 blend. ### Interest, amortization on external loans, and repatriation of investments - Steps easing FX access for amortization of FX loans: - For intra-company debt arising from funds introduced on or after April 21, 2025, access is granted if maturity is not shorter than 180 days instead of 2 years previously (Communication “A” 8230). - A parking period of 18 months applies to FX access for repayment of debt securities subscribed abroad on or after May 16, 2025 (Communication “A” 8244). - A parking period of 12 months applies to FX access for principal payments of local securities debt issued after May 26, 2025 by banks and financial institutions under BCRA supervision (Communication “A” 8245). - Beginning January 22, 2026, access to the official market is granted to prepay FX security debt before maturity if refinanced by debt with an equal or longer maturity, including bank loans (Communication “A” 8390). - Despite these changes, substantive restrictions remain in place. - Repatriation of investments: - Nonresident investors in the securities market can access the official FX market to repatriate funds and income if introduced via the official FX market on or after April 21, 2025 (Communication “A” 8230 amended by Communication “A” 8257). - Foreign direct investments introduced on or after April 21, 2025: FX access granted after a parking period of 180 days. - September 2025: access to the FX market for residents acquiring foreign direct investment held by nonresidents (including legacy flows) under some conditions broadened to all but the financial sector (Comunicación “A” 8331). - The international standard 10 percent voting power threshold is used to distinguish foreign direct investment from portfolio investment. ### Exchange restrictions and MCPs (multiple currency practice) - Staff assessment: the following exchange restrictions and MCP continue to remain in place: - General restriction: limitations on access to the official foreign exchange market (MULC) for resident firms unless the requesting entity has not in the previous and subsequent 90 days undertaken certain transactions in the securities market (CCL and MEP) — the “cross-restriction”. - Restrictions on payments for imports: - limitations on advance payments for imports of goods and services; - a 90-day delay for payments with respect to services procured from related parties; - a prohibition on accessing the FX market for making payments for imports of soybeans until the export proceeds for the soybean product have been received (Communication A 7763, May 4, 2023). - Invisible transactions (dividends and profits): limitations on accessing the FX market to make transfers abroad for distributable profits or dividends predating January 1, 2025; prohibitions on nonresident individuals from transferring proceeds of dividends, profits, rental income, and similar proceeds. - Restrictions on payments of interest and amortization on external loans: - limitations requiring that all external debt proceeds be surrendered into the local exchange market prior to accessing foreign exchange to service external debt; - limitations on advance payments of debt; - prior BCRA consent required for payments of principal (including amortization) to related parties; - prior BCRA consent required for FX market access for payments of interest to nonresident related counterparties. - MCP: Argentina maintains an MCP arising from the 30 percent withholding exchange tax on the purchase of foreign exchange to settle certain credit card transactions. - Following recent changes, the withholding tax now applies to the settlement of FX credit card balances with pesos instead of dollars. - Resident individuals can avoid the tax by purchasing FX without limit in the FX market and settling the credit balance with FX so obtained; other credit card users may not have the same access, so the MCP remains. - For program purposes, a reduction of the withholding tax or narrowing its scope would not constitute non-observance of the performance criterion on the introduction or modification of MCPs, in line with the carve-out noted in the TMU for approval of the extended arrangement. ### Macroeconomic impact and staff assessment - The cost and distortions arising from the MCP and other exchange controls have been reduced. - Easing of FX restrictions has been appropriately focused on current international transactions (such as imports) and new capital flows, while gradually addressing legacy FX liabilities (e.g., through BOPREAL issuance). - Benefits of opening the FX market are visible in terms of higher trade and capital flows. - Remaining restrictions are focused on impeding outflows, including restrictions on legacy flows, reducing risks of a surge in balance of payments needs. - Remaining FX restrictions continue to affect international trade and investment operations because some operations are not allowed, and frequent changes increase operational costs and policy uncertainty. *Source: Annex IV. Foreign Exchange Regime (content unit: 1argea2026001).* ### 13. The authorities have been using capital flow management measures (CFMs) since 2019, ### 13. The authorities have been using capital flow management measures (CFMs) since 2019 ### Overview of CFMs and recent adjustments - The authorities have been using capital flow management measures (CFMs) since 2019, given policy constraints and severe outflow pressures. - During 2023-25 the authorities implemented or adjusted over seventy CFMs, with most of the changes aimed at gradual liberalization of capital controls. - The easing focused mostly on liberalizing restrictions on access to the official FX market for financial account transactions and repatriation and surrender requirements on export proceeds. - On December 23, 2024, the Impuesto PAIS tax was eliminated; however, the withholding tax of 30 percent remains in place. ### Types of CFMs introduced since 2019 (as described by the authorities) - Measures by the BCRA, the securities authority (CNV) and other entities introduced to: - restrict official FX market (MULC) access for financial account transactions; - restrict participation in securities markets (MEP/CCL); - subject FX purchases to two separate taxes of 30 and 35 percent; - apply tight repatriation and surrender requirements on export proceeds; - limit cash withdrawals and restrict selective capital flow-related credit card transactions abroad; - limit FX holdings of banks, mutual funds and exchange bureaus. - These were all considered to be CFMs under the Institutional View on Capital Flows (IV). ### Specific restrictions that remain in place for resident individuals - Resident individuals continue to be subjected to the cross-restriction that requires them not to purchase securities settled in foreign currency from the time of accessing the official FX market and for the following 90 consecutive days. - The US$100 per month limit on FX cash purchases for resident individuals continues to be in place. ### Data adequacy and related statistical notes (Annex V, Data Issues) - Data Adequacy Assessment Rating: A (overall). - Questionnaire sector median ratings: B B A B A A A (National Accounts; Prices; Government Finance Statistics; External Sector Statistics; Monetary and Financial Statistics; Intersectoral Consistency; Median Rating). - Detailed assessments (selected): - Coverage: B C B A A - Granularity: (National Accounts top cell) B; (Government Finance Statistics bottom cell) A A B; (Monetary and Financial Statistics bottom cell) A A - Frequency and Timeliness: A A A B A - Rationale: Data provision continues to be adequate for surveillance. Remaining shortcomings in prices, national accounts, and external sector statistics complicate analysis of inflation and real sector dynamics as well as services, income, and financial flows. Examples: - Accrual data outside goods trade is reported only on a quarterly basis with a 3-month delay. - Reporting on foreign currency swap lines is sometimes delayed or incomplete. - Changes since last Article IV consultation: - In January INDEC had announced that updated CPI weights and categories based on the 2017/2018 household expenditure survey would be postponed. The authorities intend to publish the updated CPI once disinflation is firmly established. - The BCRA has improved its balance sheet and financial reporting transparency, aligned accounting and valuation for government securities with generally accepted standards, and improved financial instrument risk disclosures. - Corrective actions and capacity development priorities: - National accounts data continue to have granularity and accuracy shortcomings, given an outdated base year. - Argentina has not yet launched a GDP rebasing but has formally initiated the preparatory phase and requested IMF technical assistance to design the roadmap and assess data feasibility. - Reporting of below-the-line fiscal operations should be further improved. - Use of data and/or estimates in Article IV consultations: - IMF staff uses a definition of GIR different from the authorities’ definition by excluding the non-activated portion of the swap with the People's Bank of China to better reflect unencumbered reserves and comply with statistical guidelines on swap lines. - Other data gaps: No other data gaps were identified for this Article IV consultation. ### Selected data-frequency and timeliness entries (Table of Common Indicators Required for Surveillance, As of April 28, 2026) - Exchange Rates: Date of Latest Observation 2026-04-28; Date Received 2026-04-28; Frequency D; Frequency of Reporting D. - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Date of Latest Observation 2026-04; Date Received 2026-04; Frequency D; Frequency of Reporting W; Expected Frequency M; Committed Frequency M; Expected Timeliness 1W; Committed Timeliness 1M. - Consumer Price Index: Date of Latest Observation 2026-03; Date Received 2026-04; Frequency M; Frequency of Reporting M; Expected Frequency M; Committed Frequency M; Expected Timeliness 1M; Committed Timeliness NLT 2W. - External Current Account Balance: Date of Latest Observation 2025-12; Date Received 2026-03; Frequency Q; Frequency of Reporting Q; Expected Frequency Q; Committed Frequency Q; Expected Timeliness 1Q; Committed Timeliness NLT 1Q. - GDP/GNP: Date of Latest Observation 2025-12; Date Received 2026-03; Frequency Q; Frequency of Reporting Q; Expected Frequency Q; Committed Frequency Q; Expected Timeliness 1Q; Committed Timeliness NLT 1Q. - Gross External Debt: Date of Latest Observation 2025-12; Date Received 2026-03; Frequency Q; Frequency of Reporting Q; Expected Frequency Q; Committed Frequency Q; Expected Timeliness 1Q; Committed Timeliness NLT 1Q. ### Letter of Intent and MEFP highlights (May 8, 2026) - The administration reports: - Annual inflation has fallen from triple digits to its lowest level since 2017. - The federal government recorded two consecutive years of fiscal surplus for the first time in nearly two decades. - Poverty has declined to roughly half the level observed at the beginning of this administration to its lowest levels in 7 years. - External reserves and FX actions: - BCRA purchased over US$7.3 billion so far in 2026. - These purchases, together with domestic FX debt issuance, have led to around US$4 billion increase in net international reserves (NIR) since the start of the year. - Sustained implementation is expected to allow NIR to rise by at least US$8 billion by end-2026. - Financing and program requests: - Request completion of the second review and associated disbursement in the amount of SDR 763 million (24 percent of quota). - Request Executive Board approval of: (i) waiver of non-observance for the quantitative performance criterion (QPC) on NIR accumulation; and (ii) modification of program targets, and the setting of end-June 2026 and end-December 2026 performance criteria. - Request Executive Board approval to maintain on a temporary basis the existing exchange restrictions and one multiple currency practice subject to IMF jurisdiction under Article VIII, on grounds that these measures have been imposed for balance of payments reasons, are temporary, non-discriminatory, and do not give Argentina unfair competitive advantage; commitment to phase out these measures during the arrangement. - Reform and structural developments: - Congress approved the 2026 Budget, the Fiscal Innocence Law, and a labor modernization law. - The large investment incentive regime (RIGI) exceeds US$25 billion in approved projects, with a large pipeline pending approval. - Fitch upgraded Argentina’s credit rating to B- from CCC+. *Source: 1argea2026001 - 13. The authorities have been using capital flow management measures (CFMs) since 2019 (IMF PDF, selected sections).* ### 3. After contracting in 2024, economic activity rebounded last year. Real GDP expanded by ### 1argea2026001 - 3. After contracting in 2024, economic activity rebounded last year. Real GDP expanded by ### Recent macroeconomic developments - Real GDP expanded by 4.4 percent in 2025, driven by private demand and strong export performance, especially in energy, mining, and agriculture. - Output dynamics remained generally strong; real GDP continued to expand during Q4:2025 (up 1.2 percent relative to Q2:2025). - High-frequency indicators point to a gradual recovery in investment, including for construction, supported by an incipient recovery in credit with the recent normalization of monetary conditions. - Annual inflation fell to around 32½ percent in March, from more than 200 percent in December 2023. - Underlying monthly inflation, after excluding seasonal, regulated, and food items, has remained around 2 percent. - Poverty rates fell from a peak of 52.9 percent in H1:2024 to around 28percent by H2:2025. ### Fiscal position and structural fiscal agenda - The federal government posted a cash primary surplus of 1.4 percent of GDP in 2025, exceeding the end-year program target. - Revenues rose solidly (adjusted for reductions in trade taxes) while primary spending remained broadly flat in real terms. - Progress in structural fiscal agenda (with associated timing as reported): - Streamlining extra‑budgetary entities (end-December 2025 SB). - Publishing assessments and privatization plans for state‑owned enterprises (mid-November 2025; SB). - Improving social assistance targeting through a unified social registry (end-December 2025 SB). - Expanding coverage of e-SIDIF with IDB support (end-December 2025 SB). - Preparing a plan to enhance the efficiency and simplicity of the tax system (end-December 2025 SB). - Flagship social assistance programs covered at year-end about 96 percent of the basic consumption basket, exceeding the program floor (end-December indicative target). - Domestic arrears remain contained, with no net government financing from the central bank (end-December performance criteria). - Fiscal anchor: targeting a primary surplus of 1.4 percent of GDP (performance criterion) for 2026, generally consistent with the approved 2026 budget. - Tabled selected indicators (as presented): - GDP growth (avg, %) -1.34.43.5 - Inflation (eop, %)117.831.525.0 - Primary fiscal balance (% of GDP)1.81.41.4 - Current account balance (% GDP)0.9-1.1-0.8 - Change in net int’l reserves (US$bn) 1/4.9-9.68.0 ### Debt management and financing - Peso debt: refinanced close to 95 percent of the obligations falling due in 2025; strategy to extend maturities and reduce the share of dollar-linked instruments. - FX debt: successfully placed over US$8 billion to refinance most principal obligations falling due to bondholders in 2025 and early 2026, including: - US$2.5 billion in Treasury local-law instruments—peso-denominated debt subscribed in U.S. dollars for non-residents and the first domestic-law FX bond since 2018. - Treasury raised around US$2.3 billion through USD denominated local bonds maturing in late 2027 and 2028. - Strategy to re-access international capital markets aimed at refinancing and extending maturities during 2026-27, supported by external commercial loans guaranteed by IFIs and a recent upgrade of Argentina’s credit rating. - Substantial progress in reducing contingent liabilities from the 2005 holdouts and YPF nationalization litigations. ### Balance of payments, reserves, and FX policy - Trade surplus narrowed in 2025 as robust export growth was more than offset by a rise in imports and outbound tourism in early 2025. - Financial account deteriorated ahead of midterm elections due to sharp hedging by households and corporates; temporary support from the U.S. Treasury’s Exchange Stabilization Fund. - Reserves fell short of the end-December performance criteria on NIR, but the balance of payments has been improving recently due to record exports, rebound in private capital inflows, and gradual unwinding of pre-election hedging. - Exchange rate regime: floating, with enhanced exchange rate flexibility via adjustments to the crawling rate of the exchange rate band and introduction of daily reserve purchases by the BCRA. - Central bank purchases: cumulative purchases thus far exceeding US$7.3 billion, consistent with a daily average of over US$80 million. - NIR increase reported: around US$4 billion since the start of the year, with a program-consistent NIR increase of US$8 billion by end-December 2026 (performance criterion). ### Monetary framework and banking sector - Monetary policy framework centered on monetary aggregates as primary operational targets; liquidity managed within aggregate targeting to support re-monetization and disinflation. - BCRA resumed publication of its quarterly monetary policy report. - Base money projected to gradually increase consistent with NIR accumulation target and generally unchanged net domestic assets (NDA). - Reserve requirement change: daily reserve requirements recently reduced from 75 percent to 65 percent. - Credit to the private sector rose by 32 percent in real terms during 2025. - FX deposits reached historic highs, supporting expansion of FX lending to naturally hedged borrowers. - Corporate bond issuances in international markets about US$8 billion since October. - Banks remain well capitalized with sufficient provisioning despite a rise in non-performing loans in the household segment. ### Structural reforms, deregulation, and competitiveness - Continued agenda of deregulation, openness, and state modernization after expiration of special delegated powers in July 2025: - Streamlining administrative procedures and simplifying regulatory frameworks across transport, agro-industry, financial services, and health-related sectors. - Transition toward market-based pricing in the wholesale electricity market (end-November 2025, SB) to improve efficiency and reduce fiscal risks. - Labor Modernization Law approved to reduce labor market rigidities and decentralize collective bargaining. - Trade openness reinforced through agreements with the United States and the European Union (under Mercosur). - Extension of RIGI through July 2027 and scope expansion in oil, gas, and technology sectors. - New regime RIMI to foster investment by small and medium sized enterprises approved by Congress. - Tax reform: revenue-neutral proposal being developed to reduce distortive taxes, simplify the tax system, and broaden the tax base (end‑December 2026 new SB for certain elements). ### Outlook and risks - Projections and scenarios: - Real GDP growth for 2026 is now projected at about 3½ percent, supported by robust private investment and exports. - Inflation projected to gradually decline to around 25 percent by end-2026 and to single digits by 2028. - Current account deficit projected to narrow slightly to around 1 percent of GDP. - Capital inflows expected to recover gradually, driven by FDI linked to approved investment projects and sustained market access. - Risks: - Elevated external risk from the war in the Middle East that could tighten global financial conditions and keep spreads elevated. - Domestic risks mitigated by enhanced governing capacity and commitment to prudent policies; contingency plans ready to tighten macroeconomic policies and allow exchange rate to absorb shocks. ### Program policies and implementation priorities - Fiscal policy: - Maintain primary surplus target of 1.4 percent of GDP for 2026; measures to accommodate new spending and tax cuts prioritize enhanced targeting of social programs and energy subsidies and further reductions in discretionary spending, wage bill, and capital expenditures. - Contingency measures include accelerating subsidy cuts and normalizing fuel excises to increase primary surplus if debt interest payments prove larger than anticipated. - Strengthen revenue administration, digital modernization, and Compliance Risk Management framework (new end-December 2026 SB; integrated IT system end-June 2026 SB). - Pension system reform planned (end-December 2027 SB). - Legislation criminalizing budget deficits and monetary financing prepared; aim to enshrine fiscal anchor into a revised Fiscal Responsibility Law (end‑December 2026 SB). - Financing policy: - Continue refinancing peso debt while extending maturities and reducing reliance on short-term and USD-indexed instruments. - Maintain an appropriate stock of Treasury deposits at the BCRA enabled by net debt placements and BCRA profit transfers. - FX financing: issue domestic-law FX bonds supported by the Fiscal Innocence Law; re-access international markets to refinance obligations coming due in 2026-27. - Monetary and FX policy: - Continue daily reserve purchases and steady implementation of FX market access strategy; NIR performance criterion of US$8 billion by end-December 2026. - Exchange rate determined within an expanding band framework; FX sales within the band limited to episodes of excessive volatility. - Limit and keep temporary interventions in non-deliverable forward and USD-linked Treasury markets. - Further actions to normalize and simplify reserve requirements and enhance lending and deposit facilities to improve money and capital market functioning (prior actions). *Sources: National authorities and Fund staff estimates and projections.* ### 21. Efforts will continue to enhance the central bank’s balance sheet. To further strengthen ### Efforts will continue to enhance the central bank’s balance sheet ### Central Bank balance sheet and governance - Use part of the BCRA profit distribution to recapitalize the central bank, including by repurchasing Letras Intransferibles, with a small buffer maintained in the Treasury single account at the BCRA to safeguard the adequate functioning of the peso debt market. - Concluded a Memorandum of Understanding between the BCRA and the Ministry of Economy on the handling and servicing of IMF financing. - BCRA plans: - Modernize BCRA governance arrangements and internal organization with IMF technical assistance. - Prepare a plan to transition to IFRS (end-September 2026, new SB). - Further strengthen communication, including publication of quarterly monetary policy reports with greater emphasis on forward policy guidance. ### Financial sector policies and risks - Continue strengthening regulatory and supervisory frameworks to support sustainable deepening of capital markets. - Observations and near-term expectations: - The financial system remains resilient but shallow. - Bank credit to the private sector is expected to strengthen later in the year as credit quality gradually improves and the economy fully absorbs last year’s election related shock. - Supervisory emphasis and measures: - Safeguard stability through strong supervision and regulation. - Focus on emerging risks including household credit growth and banks’ reliance on short-term funding from mutual funds. - Apply prudent limits on FX credit to unhedged borrowers. - Continue efforts to develop the capital market and promote competition. - Enhance oversight of non‑bank financial institutions, including introduction of new capital rules and leverage restrictions for ALyCs. - Closely monitor growth of Virtual Asset Service Providers (VASPs); regulatory coverage may be expanded to fintech transaction providers as activity increases. ### Structural policies and reforms - Second‑generation reforms to boost productivity and long‑term growth, building on recently approved labor modernization legislation. - Recent and ongoing measures: - Congressional approval of targeted amendments to the Glacier Protection Law to clarify environmental regulations and reduce legal uncertainty while preserving environmental safeguards and respecting the constitutional role of provinces, to facilitate large‑scale investment projects in energy and mining. - Advancing reforms to: - Strengthen private property rights and legal certainty (reinforce inviolability of property, modernize expropriation procedures, improve land‑tenure frameworks) in line with Mayo Council recommendations. - Expand educational freedom and institutional autonomy to reduce excessive state intervention. - Significantly reduce logistics costs through public tenders to expand ports and transport networks. - Considering complementary targeted active labor market policies, with special focus on training to facilitate labor reallocation and limit dislocation costs during transition to a more open and competitive economy and a more flexible labor market. ### Governance, AML/CFT, and public sector transparency - Deregulatory reforms aimed at narrowing opportunities for rent‑seeking and corruption. - Continued efforts to: - Strengthen public procurement processes. - Improve access to public information. - Avoid conflicts of interest (including advancing work on the Public Ethics Bill). - AML/CFT implementation: - Advancing a risk‑based AML/CFT framework with greater focus on higher‑risk sectors, including strengthened oversight of VASPs and enhanced fit‑and‑proper requirements for their owners and management. - Strengthened risk reporting requirements. - Published a report on the implementation of key FATF recommendations to align AML/CFT processes with international standards (end-November 2025 SB). - Reinforced Beneficial Ownership Registry through improved reporting, verification, and inter‑agency information sharing. - Following the Fund’s AML/CFT diagnostic TA report, plan to implement three out of six priority recommendations in 2026 (end‑December 2026 new SB). ### Data, CPI update, and program monitoring - Commitment to timely production and dissemination of credible, high quality data. - Intention to publish a new CPI based on updated weights once disinflation is firmly established; process supported by Fund technical assistance. - Program monitoring: - Implementation will be monitored through reviews, quantitative performance criteria, indicative targets, and structural benchmarks. - Commit to provide IMF staff all data needed for monitoring, including data detailed in the attached TMU. - Performance assessed through semi-annual reviews. - Continuous performance criterion (PC) on the non-accumulation of external payments arrears and standard continuous PCs apply. - Third and fourth reviews tentatively planned for September 2026 and February 2027, based on quantitative performance criteria for end-June 2026 and end-December 2026, respectively. ### Selected quantitative targets and indicators (as presented) - Fiscal targets (Performance Criteria): - 1. Cumulative floor on the federal government primary balance: 3/4,357.26 ,070.0...6,900.1Met............10,882.511,769.2Met - 2. Ceiling on the federal government stock of domestic arrears 4/2,548.26,360.6...2,161.6Met............6,831.71,752.6Met - Continuous Performance Criterion: - 3. Non-accumulation of external debt payments arrears by the federal government 0.00.0...0.0Met0.0...0.0Met0.00.0Met - Indicative Target (social coverage): - 4. Floor on the coverage of social assistance programs (AUH, Tarjeta Alimentar) (percent of basic consumption basket): 99.095.0...98.1Met95.0...97.9Met95.096.0Met - Monetary targets (Performance Criteria): - 5. Cumulative floor on the change in net international reserves of BCRA 5/ 6/-4.9............-0.50.2-3.3Not met-1.0-1.6-12.1Not Met - 6. Cumulative ceiling on net central bank financing of the federal government 7/...............0.00.00.0Met0.0-162.4Met - Indicative Target: - 7. Ceiling on the Change in the BCRA’s Net Domestic Assets 8/5,826.0............8,954.18,170.913,016.2Not met##20,100.020,289.024,782.5Not met - Selected later-period indicative figures (concluded table): - Fiscal targets – end-June 2027: - 1. Cumulative floor on the federal government primary balance: 4,286.44,426.88,458.46,861.116,259.97,487.6 - 2. Ceiling on the federal government stock of domestic arrears: 8,057.52,920.88,057.59,148.19,148.110,986.7 - Continuous Performance Criterion: - 3. Non-accumulation of external debt payments arrears by the federal government: 0.00.00.00.00.00.0 - Indicative Target (social coverage): 95.090.695.095.095.095.0 - Monetary targets – end-June 2027: - 5. Cumulative floor on the change in net international reserves of BCRA 5/ 6/-1.5-1.6-10.53.2-8.6-4.10.4 - 6. Cumulative ceiling on net central bank financing of the federal government 7/0.0862.30.00.00.00.0 - 7. Ceiling on the Change in the BCRA’s Net Domestic Assets 8/24,500.024,159.025,570.024,000.0500.04,500.07,500.0 ### Structural benchmarks (selected proposed and current) - Proposed new structural benchmarks and completion dates: - Share with Fund staff a plan to transition to IFRS. Monetary / FX policy — End-September 2026. - Develop (and share with Fund staff) a proposal for the next phase of the tax reform — end-December 2026. - Operationalize an integrated IT system allowing the Ministry of Economy timely access to aggregated, anonymized, and non-identifiable tax administration indicators produced by ARCA — end-June 2026. - Submit to Congress the draft 2027 budget, consistent with the zero-overall budget deficit rule — end-September 2026. - Establish and maintain a compliance risk register covering key tax compliance risks — end-December 2026. - Implement three out of six reform roadmap priority recommendations in the Fund’s TA report on the AML diagnostic findings — end-December 2026. - Selected status of current structural benchmarks (completion dates and implementation status): - Publish a report of the SOEs included in Law number 27.742, alongside a roadmap for their privatization and concessions — mid-November 2025 — Met. - Publish guidelines needed to ensure an efficient and transparent privatization process of SOEs included in Law number 27.742 — mid-November 2025 — Met. - Develop a plan to eliminate inefficient extra-budgetary entities — end-September 2025 — Met. - Submit to Congress the draft 2026 budget, consistent with the zero-overall budget deficit rule — end-September 2025 — Not met. - Eliminate all fiduciary funds (with the exception of the fiduciary fund for residential gas subsidies) — end-December, 2025 — Not met. - Implement resolution 21/2025 to deregulate the wholesale electricity market (MEM) — end-November 2025 — Met. - Publish Fund TA report on implementation of several key FATF recommendations — end-November 2025 — Met. - Complete integration of administrative databases into a single social registry (SIS) — end-December 2025 — Met. - Develop (and share with Fund staff) a proposal to enhance efficiency and simplicity of the tax system envisaging rationalization of costly tax expenditures — end-December 2025 — Met. - Implement expansion in coverage of e-SIDIF working with IDB — end-December, 2025 — Met. - Present to Congress a diagnostic and revision option report to the pension system — end-December, 2027 — Modified. - Present a plan to revamp the Fiscal Responsibility Legislation — end-December, 2026 — Modified. ### Program technical definitions and exchange rates (TMU highlights) - Program exchange rates for assessment of quantitative targets up to end-March 2026 are those that prevailed on January 31, 2025 (see Text Table 1). - Argentine Pesos to the US dollar 1,053.50 - Argentine Pesos to the SDR 1,373.58 - Argentine Pesos to the Euro 1,097.43 - Argentine Pesos to the Canadian dollar 731.24 - Argentine Pesos to the British pound 1,311.71 - Argentine Pesos to the Renminbi 145.42 - Gold price (US$/ounce) 2,808.08 - 1/ Rate published by the BCRA as of Jan 31, 2025. - Program exchange rates for assessment starting with end-June 2026 test date are those that prevailed on December 31, 2025 (see Text Table 2). - Argentine Pesos to the US dollar 1,459.42 - Argentine Pesos to the SDR 1,992.62 - Argentine Pesos to the Euro 1,707.88 - Argentine Pesos to the Canadian dollar 1,060.50 - Argentine Pesos to the British pound 1,957.99 - Argentine Pesos to the Renminbi 208.18 - Gold price (US$/ounce) 4,326.01 - 1/ Rate published by the BCRA as of December 31, 2025. - Statistical and definitional approach: - Any variable not explicitly defined for monitoring a PC or IT is defined in accordance with the Fund's standard statistical methodology (GFS Manual 2014, Balance of Payments Manual sixth edition, Public Sector Debt Statistics Guide). - For omitted variables relevant for program targets, Argentine authorities shall consult with Fund staff to reach an understanding based on Fund standard statistical methodology. *Source: National authorities and Fund staff estimates and projections.* ### 5. Definitions: ### 5. Definitions: ### Primary balance: definition, coverage, and treatment - The primary balance of the federal government is measured above-the-line and defined in accordance with the monthly and annual reporting of the “Esquema IMIG”, with additional as needed adjustments to reflect 2014 GFS Manual accounting practices. - Primary balance = total revenues (ingresos totales, according to “Esquema IMIG”) minus primary spending (gastos primarios). - Revenues are recorded on a cash basis and include: - tax revenues (ingresos tributarios) - property revenue income (rentas de la propiedad) - other current revenues (otros ingresos corrientes) - capital revenues (ingresos de capital) - For assessing the floor of the primary deficit, revenues exclude: - any type of financial transfers from the Central Bank (including Utilidades and Adelantos Transitorios) - interest income from intra-public sector holding of securities and debt obligations - proceeds from the sale of financial assets (including privatization proceeds through the sale of shares) - proceeds from the sale of licenses/permits (including payments for mobile phone or broadcast licenses, and natural resource permits) - revenue income from the issuance of government debt that is part of non-tax revenues (resto rentas de la propiedad) - special drawing rights (SDRs) allocated by the Fund or received bilaterally from other IMF members - Federal government primary expenditure is recorded on a cash basis and includes: - social protection (prestaciones sociales) - economic subsidies (subsidios económicos) - operational expenses (gastos de funcionamiento) - current transfers to provinces (transferencias corrientes a provincias) - other current spending (otros gastos corrientes) - capital spending (gastos de capital), which includes capital transfers to provinces - Government-funded public-private partnerships: - will be treated as traditional public procurements - federal government obligations associated with public private partnerships will be recorded transparently in budget data and measured as part of the Federal government deficit as they occur (on a cash basis) - Costs associated with divestment operations or liquidation of public entities (e.g., cancellation of contracts, severance payments) will be allocated to current and capital expenditures accordingly - All primary expenditures (including fines) directly settled with bonds or other non-cash liabilities: - will be recorded as spending above-the-line and will therefore contribute to a decrease in the primary balance - exclusions: settlement of liabilities related to pensions, revenue sharing and expenditure allocation, with the provinces and the Autonomous City of Buenos Aires, associated with court proceedings that are either finalized or pending as of the start date of the program, and payments of arrears as per ICSID or similar arbitration rulings ### Measurement and monitoring of the primary balance - Measurement: - The Federal government’s primary balance will be measured at each test date as the cumulative value starting from the beginning of each calendar year. - Monitoring: - All fiscal data referred to above and needed for program monitoring purposes will be provided to the Fund with a lag of no more than 25 calendar days after the end of each month. ### Ceiling on Federal Government Accumulation of Domestic Arrears: definition, measurement, monitoring - Definition: - Domestic arrears are defined as the floating debt, i.e., the difference between primary spending recorded on an accrual basis (gasto devengado, from the SIDIF system) and primary spending recorded on a cash basis (base caja, from the Treasury). - This includes intra-public transfers (transferencias figurativas), and primary spending for: - personnel (gasto en personal) - acquisition of goods and services (bienes y servicios) - nonprofessional services (servicios no profesionales) - capital expenditures (gastos de capital) - transfers (transferencias) - Measurement: - The arrears are measured on a daily basis. - Arrears will be capped at 0.8 percent of 2026 GDP (ARS 1,143,518.5 billion) for the daily average of the final two weeks of each quarter. - Monitoring: - Daily data on the stock of arrears (and underlying spending on an accrual and cash basis), recorded at daily frequency will be provided to the Fund with a lag of no more than 25 calendar days after the end of each month. ### Cumulative Floor on the Change in Net International Reserves (NIR) of BCRA: definitions, measurement, monitoring, adjustors - Definitions: - Net international reserves (NIR) of the BCRA = U.S. dollar value of gross official reserves of the BCRA minus gross official reserve liabilities. - Non-U.S. dollar denominated foreign assets and liabilities will be converted into U.S. dollar at the program exchange rates. - Gross official reserve assets (BPM6-consistent) include: - (i) monetary claims - (ii) free gold - (iii) holdings of SDRs - (iv) the reserve position in the IMF - (v) holdings of fixed income instruments - (vi) net cash balances within the Latin American Trade Clearing System (ALADI) - Excluded from reserve assets: assets that are pledged, collateralized, or otherwise encumbered; claims on residents; claims in foreign exchange arising from derivatives in foreign currency vis-à-vis domestic currency; precious metals other than gold; assets in nonconvertible currencies; illiquid assets. - Gross official reserve liabilities in foreign currencies include: - (i) foreign currency liabilities with original maturity of one year or less - (ii) Fund cumulative net purchases from the start date of the program onwards - (iii) any deliverable forward foreign exchange (FX) liabilities with original maturity of one year or less on a net basis as undertaken by the BCRA or by any other financial institutions on behalf of the BCRA - Neither the Federal government’s foreign liabilities nor its FX deposits at the BCRA are considered gross foreign liabilities of the BCRA. - For program purposes, foreign currency swaps (including with the PBOC, BIS, and ESF), foreign exchange bank reserve requirements, SEDESA, ALADI and other non-resident deposits will be considered gross official reserve liabilities. - Measurement: - The change in net international reserves will be measured as the cumulative change in the stock of NIR at each test date relative to the stock on December 31, 2024. - Monitoring: - Foreign exchange asset and liability data at the BCRA will be provided to the Fund at daily frequency within two days. - Net international reserves will be provided to the Fund at weekly frequency within two days. - Adjustors: - Official non-project borrowing and grants: - The NIR targets will be adjusted upward (downward) by the surplus (shortfall) in program loan disbursements and grants from multilateral institutions (including the BCIE, EIB, IBRD, IADB and CAF) and borrowing and grants from official bilateral partners, relative to the baseline projection reported in Text Table 2. - The value of the downward adjustor, i.e., in the event of a shortfall of borrowing and grants, would be capped at a cumulative of US$2 billion in each calendar year. - Program loan disbursements are defined as external loan disbursements (excluding project financing disbursements and IMF disbursements) from official creditors for the financing of the general government and/or the BCRA. ### Cumulative Ceiling on the BCRA’s Net Financing of the Federal Government: definitions, measurement, clarification, monitoring - Definitions: - Central bank (BCRA) financing to the government includes: - (i) overdraft transfers from the BCRA to the Federal Government (Adelantos Transitorios) - (ii) distribution of profits (Utilidades) above and beyond the agreed 2026 buffer of AR$4 trillion to support the normal functioning of the peso debt market - (iii) the acquisition of government debt by the BCRA in either the primary market or by direct purchases from public institutions - (iv) issuance of new non-marketable government bonds (Letras Intransferibles) - (iv) purchase by the BCRA of government securities in the secondary markets (including bilateral transactions, conducted at MAE and BYMA, or made at other parties’ discretion from application of regulation A7291 and the issuance of “put options” on government securities under A7555 and A7716) - Net financing of the Federal Government = amount of financing to the government net of: - the cumulative change in peso deposits at the BCRA since December 31, 2025 - cash transfers from the Federal Government to the BCRA to: - (i) repurchase government securities - (ii) reduce the stock of overdraft transfers or the stock of non-marketable government bonds - (iii) recapitalize the BCRA - Exclusions from this definition: - transactions done in the context of debt exchanges or rollover of non-marketable government bonds financed with proceeds of IFI disbursements - transactions with peso-denominated government instruments of residual maturity of less than twelve months used to conduct monetary policy - Measurement: - The cap of cumulative flows on net financing since December 31, 2025 is set to zero. - Clarification: - Any decrease in the stock of Adelantos shall only reflect cash payments of this amount by the Treasury to the BCRA. - Transfer of Letras Intransferibles to the BCRA will not reduce the stock of Adelantos. - Monitoring: - Daily data will be provided to the Fund within two days. - Secondary market purchases will be measured up to the end of the month prior to the target date given unpredictability and time needed to offset them. ### Federal Government Non-Accumulation of External Debt Payments Arrears: definitions, coverage, monitoring - Definitions: - Debt is understood to mean a current, i.e., not contingent liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services and which requires the obligor to make one or more payments in the form of assets (including currency) or services, at some future point(s) in time; payments discharge principal and/or interest liabilities. - Debt forms include: - i. loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, and official swap arrangements) - ii. suppliers’ credits (supplier permits obligor to defer payments after delivery/provision of goods/services) - iii. leases (debt = present value at inception of all lease payments expected during the agreement, excluding payments for operation, repair or maintenance) - Under this definition, arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt are debt. - External debt: for the program, determined according to the residency criterion and includes nonresident holdings of Argentine law peso and foreign currency debt. - External arrears: external debt payment arrears for program monitoring purposes are defined as external debt obligations (principal and interest) falling due after the start date of the program, that have not been paid, considering the grace periods specified in contractual agreements. - Coverage: - This performance criterion covers the federal government. - This performance criterion does not cover: - (i) arrears on trade credits - (ii) arrears on debt subject to renegotiation or restructuring - (iii) arrears resulting from the nonpayment of debt commercial claims that are being liquidated prior to the start date of the program - Monitoring: - This performance criterion will be monitored on a continuous basis. - Program loan disbursements (Baseline Projection) 1/ (cumulative from January 1. USD million): - end-June 2026 500 - end-December 2026 1,854 - end-June 2027 500 ### Exchange restrictions, MCPs, bilateral payment agreements and import restrictions - Consistent with commitments in IMF arrangements, the authorities will not: - (i) impose or intensify any exchange restrictions - (ii) introduce or modify Multiple Currency Practices (MCPs), as elaborated in the TMU - (iii) conclude bilateral payment agreements that are inconsistent with Article VIII - (iv) impose or intensify import restrictions for balance of payment reasons (continuous performance criteria) - Note: Narrowing the scope or lowering the rates of the withholding tax assessed as giving rise to MCPs by the Fund will not constitute a modification as defined under the performance criterion. ### Indicative targets — Ceiling on the Change in the BCRA’s Net Domestic Assets (NDA): definition, measurement, monitoring, adjustors - Definition: - NDA of the BCRA = difference between base money and net international reserves measured at program exchange rates. - Base money = banknotes and coins issued by the BCRA plus banks’ accounts at the BCRA denominated in pesos. - Reserve requirement = peso-denominated reserves on account at the BCRA that banks are required to keep by regulation on average each month. - Measurement: - The ceiling applies to the monthly average of NDA for the final month of each quarter. - The change will be calculated with respect to the average of the month of December 2025 which was ARS 56,594 billion. - Monitoring: - Data will be provided to the Fund on a daily basis with a lag of no more than 2 days. - Adjustors: - Official non-project borrowing and grants: - NDA ceilings will be adjusted downward (upward) by the surplus (shortfall) in program loan disbursements and grants from multilateral institutions (including the BCIE, EIB, IBRD, IADB and CAF) and borrowing and grants from official bilateral partners, relative to the baseline projection reported in Text Table 2. - The value of the upward adjustor, i.e., in the event of a shortfall of borrowing and grants, would be capped at a cumulative of US$2 billion in each calendar year. - Reserve requirement: - NDA ceilings will be adjusted if the minimum reserve requirement on commercial banks is changed after the start date of the program. - The ceilings will be increased (decreased) by the same peso amount as the increase (decrease) in required reserves due to regulatory changes. - The BCRA will reach agreement with IMF staff prior to making any changes to the levels or structure of reserve requirements. ### Floor on the Coverage of Social Assistance Programs: definition and monitoring - Definition: - The target will be calculated as the percentage of the basic consumption basket (canasta básica alimentaria) covered by the benefits from: - Asignación Universal para Protección Social, which includes: - Asignación Universal por Hijo - Asignación por Embarazo - Tarjeta Alimentar - Monitoring: - Data will be provided to the Fund with a lag of no more than 25 calendar days after the end of each month. - The indicative target will be measured as the average of the coverage in the six months prior to the test date. - The social assistance benefit will be measured for an adult-equivalent. *Source: 5. Definitions (chapter/section).* ### 29. In addition to providing any data and information staff request to monitor program ### 1argea2026001 - 29. In addition to providing any data and information staff request to monitor program ### Data reporting requirements for program monitoring — Daily - Nominal closing exchange rates of the Argentinian peso against the U.S. dollar; FX volumes at the official market, total currency issued by the BCRA; deposits held by financial institutions at the BCRA; total liquidity assistance to banks through normal BCRA operations, including overdrafts; and interest rates on overnight deposits. - Disaggregated data of BCRA’s international reserve assets by source with a lag of three days. - Aggregated data on banks’ foreign exchange positions, provided in the following categories: public national; public provincial; private domestic; private foreign; and small banks. - Daily data on BCRA FX sales and purchases in the official and forwards FX markets showing the minimum, maximum and weighted average of exchange rate of the Argentinian peso against the U.S. dollar at the time of these FX sales and purchases and amount in US dollar. - Daily data on Federal treasury FX sales and purchases amount and average FX rate in USD dollar. - Data on gross BCRA sales and purchases of securities settled in different currencies, for each market segment and at transaction price in the applicable currency, will be provided to the Fund with a daily frequency, with a lag of three days. - Data on BCRA position of non-deliverable futures by maturity, to be provided within two working days. - Data on BCRA government securities purchased and sold in the secondary market by maturity and mechanism, and corresponding price and quantities, with a lag of one day. - Daily data on BCRA-issued securities by type of security and interest rate. - Daily data on sales and purchases of securities settled in different currencies, recorded and provided by the Comision Nacional de Valores, including trading by the BCRA. This information will include a report of the daily estimation of total stocks and implicit exchange rate of the most representative securities transacted in the CCL and MEP modalities and operations. - Daily data on Treasury deposits in SDRs at the BCRA. - Daily data on flows in and out of the BCRA’s SDR holding account including amount and purpose. - Daily data on external financing from each multilateral and bilateral creditor, broken down by budget support and project financing, and by largest bilateral projects. - Data on the outstanding stock of BCRA put options on government bonds. ### Data reporting requirements for program monitoring — Weekly - Weekly data of the following international reserve liabilities for the purpose of the computation of net international reserves at current rate and at program rate: (i) swap lines, (ii) regulatory requirement FX deposits, (iii) Sedesa liabilities, (iv) SDR Buffer, (v) BOPREAL liabilities of maturing in less than one year and (vi) other liabilities. - BCRA balance sheet. - Weekly data on (i) the stock of BOPREAL by series, (ii) the maturity profile of BOPREAL, (iii) interest payments on BOPREAL and (iv) the stock of the debt registry. - Weekly data of (i) Gold and (ii) SDR components of international reserves. ### Data reporting requirements for program monitoring — Fortnightly - Interest rates on domestic debt instruments including LELITE, LEDES, LECER, LEPAS, BONAR, BONTE, BONAD, LECAP, BONCAP and BONCER at different maturities. - Information on outstanding debt instruments (local and global debt): maturity, currency, legislation, characteristics (DL, Dual, CER, fixed), holders (banks, FXI, insurance, corporates, foreigners, BCRA, FGS, BNA, provinces). ### Data reporting requirements for program monitoring — Monthly - Federal government operations including monthly cash flow from the beginning to the end of the current fiscal year (and backward revisions as necessary), with a lag of no more than 25 days after the closing of each month, according to both the format of the Informe Mensual de Ingresos y Gastos (IMIG) and to the format of the Cuenta Ahorro Inversion Financiamiento (AIF). Specific reporting will include details on: - i. Revenues from sales of physical assets, licenses, and permits (and 12-month projections for future sales of such assets). - ii. Income related to the issuance of government debt securities (resto de rentas de la propiedad). - Data on the stock of domestic arrears. - Fiscal financing sources (below-the-line), issuance of domestic public securities, financing from within the non-financial public sector, external financing, and other financing schemes. Data to be provided with a lag of no more than 25 days after the closing of each month. Detailed quarterly financing plan for the coming twelve months, including the aforementioned sources, to be provided one month in advance. - External financing received, including via swaps, and projections for the coming four quarters, with loans and grants categorized by program and project. Data to be provided with a lag of no more than 25 days after the closing of each month. - On federal debt: - i. Domestic and external debt service (amortization and interest payments) of the federal government, with a lag of no more than 25 days after the closing of each month. Projected monthly federal government debt amortization/repayments and interest payments (local currency and FX bonds, treasury bills, Eurobonds, domestic loans, external commercial and external official loans). This would include both direct and guaranteed debt. In the case of issuance of government guaranteed debt, the name of the guaranteed individual/institution shall be included. - ii. Information on the stock of external arrears will be reported on a continuous basis, including those resulting from resolved international litigation cases. - iii. Federal government debt stock by currency, as at end month, including by (i) creditor (official, commercial domestic, commercial external); (ii) instrument (local currency and FX denominated bonds, treasury bills, Eurobonds, domestic loans, external commercial and external official loans); and (iii) direct and guaranteed. - iv. The balances of the (federal) government at the central bank and in the commercial banking system needed to determine the cash position of the (federal) government. - Debt service (amortization and interest payments) of international repos contracted by the BCRA. - Required and excess reserves of the banking sector in local and foreign currency. - Balance sheets of other financial corporations (non-deposit taking), including holdings of federal and provincial debt and of the BCRA instruments within one month after month end. - Data on the total loans value of all new federal government-funded public private partnerships. ### Data reporting requirements for program monitoring — Quarterly - Federal government transfers to the provinces and the Autonomous City of Buenos Aires related to the settlement of liabilities associated with pensions, revenue sharing and expenditure allocation, as well as payments of arrears as per ICSID or similar arbitration rulings. - On provincial government operations, with a lag of no more than two months after the closing of each quarterly, according to the format defined by the Ministry of Finance. - On provincial debt: - i. Quarterly data on the provincial government debt stock by currency, provided within two months following the closing of each quarter, including by (i) creditor (official, commercial domestic, commercial external; (ii) instrument (local currency and FX denominated bonds, treasury bills, Eurobonds, domestic loans, external commercial and external official loans); and (iii) direct and guaranteed. - ii. Quarterly domestic and external debt service (amortization and interest payments) of the provincial governments, provided within two months following the closing of each quarter. - iii. Quarterly projections for the following semester for provincial government debt amortization/repayments and interest payments, at least 30 days before the end of each quarter. This would include local currency and FX bonds, treasury bills, Eurobonds, domestic loans, external commercial and external official loans), and both direct and guaranteed debt. In the case of issuance of government guaranteed debt, the name of the guaranteed individual/institution shall be included. ### Supplementary developments and staff observations (Supplement dated May 18, 2026) - Reserve accumulation and related transactions: - The BCRA has purchased around US$900 million thus far in May, bringing total purchases to US$8.2 billion year-to-date. - The Treasury continues to place local-law FX bonds (Bonares), raising US$2.8 billion since their introduction earlier this year, including around US$500 million during last week’s auction. - Privatization progress: sale of Transener (US$365 million) completed; tender launched for AySA (expected to yield around US$500 million). - Net international reserves are estimated at negative US$6.5 billion, an increase of about US$5 billion since end-2025 and the highest level since the completion of the first review. - Sovereign spreads continue to hover around 500–525 basis points. - The exchange rate has remained broadly stable at around ARS/USD 1,400, with the upper bound of the band roughly 24 percent above the current level. - Inflation and activity: - Monthly headline inflation fell from 3.4 percent in March to 2.6 percent in April, with core inflation reaching 2.3 percent—its lowest reading since November. - Twelve-months-ahead inflation expectations remain well anchored (at around 24 percent y/y) and consistent with a gradual disinflation process. - High-frequency indicators suggest a rebound in activity in March, driven by a strong recovery in construction and manufacturing, although performance remains uneven. - Government awarded two sections of the national highways concession program, expected to support further recovery in construction and employment. - Central bank operations and fiscal transfers: - The BCRA published the Q1:2026 Monetary Policy Report (IPOM) explaining refinements to the monetary policy framework and operations (prior actions, see Staff Report ¶26), aimed at mitigating interest rate volatility, and near-term outlook for remonitization and inflation. - The BCRA published its 2025 financial statements, highlighting further improvements in the health of its balance sheet mainly reflecting the near elimination of remunerated central bank liabilities. - As mandated by law, the BCRA transferred ARS 24.4 trillion (2.1 percent of GDP) of its profits to the Treasury, of which ARS 18.4 trillion were used by the Treasury to repurchase non‑marketable government bonds (Letras Intransferibles), further recapitalizing the central bank; the remaining ARS 6 trillion—consisting solely of realized gains—were deposited at the Treasury account at the BCRA. *Staff Report for the 2026 Article IV Consultation — Informational Annex (May 11, 2026) and Supplement (May 18, 2026).* ### 4. Adherence to the fiscal anchor continues. The cumulative primary surplus (excluding ### 4. Adherence to the fiscal anchor continues. The cumulative primary surplus (excluding ### Fiscal performance and measures - The cumulative primary surplus (excluding privatization proceeds) reached 0.4 percent of GDP in April, in line with program fiscal targets. - Tax revenues experienced a 7 percent cumulative y/y real decline. - The budget was amended to reduce spending by 0.2 percent of GDP to accommodate last year’s Congressional spending initiatives. - Energy tariff adjustments are proceeding. - The authorities are considering extending the Large Investment Incentive Regime (RIGI) to other sectors, including industrial processing, green energy, and high-tech activities; forthcoming review discussions will cover ensuring proposals do not weaken the fiscal anchor nor the equity and efficiency of the tax system. - Since the start of the Middle East war, local fuel prices have risen by about 25 percent. To mitigate the impact, the partially owned state oil company (YPF) raised fuel prices by around 1 percent in May and extended the price freeze buffer for an additional 45 days. ### Program context, ownership, and political developments - Statement by Mr. Madcur, Executive Director for Argentina, and Mr. Nador, Senior Advisor to Executive Director — May 21, 2026. - This second review of the 2025 Extended Fund Facility (EFF) was conducted in parallel with the Article IV consultation. - The near-term dynamics distinguish the period ahead of the 2025 mid-term elections and the phase following the strong electoral outcome. - The strong societal support for President Milei’s reform program translated into a decisive electoral outcome, enabling a new phase of the monetary framework in late 2025: a fitted policy stance, recalibration of the exchange rate bands, and introduction of a BCRA foreign exchange purchase program. - The period leading up to the elections saw unprecedented market stress, with the exchange rate pushed toward the upper band by a sustained speculative attack; the dollar accounted for over 50 percent of M2. - Authorities emphasize that the episode tested and confirmed the resilience of a well-designed program; the missed end-2025 NIR target largely reflected an exogenous negative shock and contingency mechanisms broadly operated as intended. - Following the elections, expanded congressional backing enabled passage of key structural reforms, including the 2026 Budget Law, the Labor Modernization Law, the Fiscal Innocence Law, and amendments to the Glaciers Law to enhance the regulatory framework. ### FX purchases, reserve dynamics, and market reaction - In January 2026, following the swearing-in of the new Congress, the BCRA launched a foreign exchange purchase program as part of its remonetization strategy. - The plan envisaged FX purchases of at least USD 10 billion during 2026, aligned with rising peso demand and supported by sound fiscal policy and safeguards to limit exchange rate volatility. - Cumulative purchases already exceed USD 8 billion and implementation is surpassing favorable projections. - The upper bound of the FX band currently stands more than 24 percent above the prevailing market rate. - The Central Bank has sustained FX purchases at an average pace of around USD 91 million per day since the start of the year. - Fitch upgraded Argentina’s credit rating to B- (from CCC+). - Authorities note decisive contribution from the United States’ unequivocal support and timely actions during the speculative attack. ### Assessment of policy choices and reforms - Authorities contend that credible, realistic policy guidance is more effective than overly ambitious targets; excessively optimistic benchmarks can backfire by amplifying speculative pressures. - The unprecedented fiscal adjustment amounted to five percentage points of GDP within the first month and has been sustained since the start of President Milei’s administration; this fiscal stance remains the central anchor of the program. - Authorities have dismantled thousands of distortive regulations, trade barriers, and FX restrictions, supported recovery, and advanced financial sector reforms: closer alignment with international supervisory standards, phase-out of subsidized credit, removal of interest rate caps, and steps to reduce the sovereign–bank nexus. - On reserve accumulation, authorities argue that alternative earlier accumulation during the October 2025 pressures would not have altered the shift to risk-off conditions and could have exacerbated pressures; they assert no divergence with staff on the importance of strengthening external buffers and are rebuilding external buffers at a pace that exceeds expectations, anchored in remonetization dynamics. ### Outlook and policy stance - Authorities largely concur with the Selected Issues Paper and welcome its contributions to the structural reform agenda. - Striking the balance between disinflation, external adjustment, and growth requires flexibility; sustaining progress over time and retaining policy adaptability is emphasized. - On monetary policy, staff favor inflation targeting, but authorities take a pragmatic view and do not consider inflation targeting feasible in the near to medium term. - Establishing conditions under which the policy rate can serve as an effective instrument will take time given the legacy of past policy mismanagement and a shallow financial system; the monetary authority will proceed gradually and in a well-sequenced manner to rebuild credibility and institutional strength. - The macroeconomic stabilization plan is described as delivering tangible results: growth has resumed, the poverty rate has almost halved, and the exchange rate has remained resilient within the band amid external shocks. - Authorities remain committed to an ambitious and comprehensive reform agenda and to continued constructive engagement with the Fund to consolidate gains and support Argentina’s return to international capital markets. *Source: 1argea2026001 - 4. Adherence to the fiscal anchor continues. The cumulative primary surplus (excluding* --- _Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1argea2026001.pdf_