Press Release: IMF Managing Director Issues Statement on Transitional Credit Support for Argentina

IMF News, January 17, 2003

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Press Release No. 03/06, January 17, 2003.
Mr. Horst Köhler, Managing Director of the International Monetary Fund (IMF), confirmed he is recommending to the IMF's 24-member Executive Board approval of transitional financial support for Argentina.
He transmitted the Argentine authorities' letter of intent and memorandum of economic policies, which are included in the IMF staff report for the transitional program in 2003.

The Article IV discussion on January 8 "demonstrated the complexity of the situation in Argentina" as staff, management and the authorities worked to secure a policy framework that:
- "achieves durable macroeconomic stability,"
- "supports the resumption of growth," and
- "improves the investment climate."
The Article IV consultation report is described as "candid in stressing that difficulties in securing a political consensus in Argentina have been a core problem impeding progress toward a program."
Recent months: "the economic situation has somewhat stabilized, though it remains fragile."

The government has developed a series of policy commitments that could, "if implemented consistently and credibly, build a bridge to a comprehensive program to be negotiated with a new government after the elections."
Objectives of the transitional program:
- Preserve macroeconomic stability through the course of the upcoming elections.
- Reduce the risk of policy reversals.
- Provide a framework for the multilateral development banks to support social programs in Argentina, "which are key to protect the vulnerable groups from the adverse effects of the crisis."

The transitional program "involves exceptional risks to the Fund which are outlined with appropriate care and depth in the staff report."
Identified risk factors:
- "the fragility of the macroeconomic policy framework"
- "the political challenges to implementation"
The Board is urged to "weigh these risks carefully, and their implications for Argentina, the region, and for the Fund itself."

Mr. Köhler: "I have decided to recommend the approval of this arrangement as a demonstration of a good faith effort of the international community in favor of the people of Argentina."
Assurance to the Argentine people: "the Fund will do its part to make this program succeed."
Emphasis on domestic responsibility: "The key to a durable solution to the present difficulties lies, of course, in the actions that Argentina takes."
Hope expressed that the Fund's contribution "will catalyze a cohesive effort on the part of the Argentine authorities, the provinces, legislators and civil society to fully implement this transitional program."

Press Release No. 03/06, January 17, 2003.