IMF Executive Board Completes Fourth Review Under Argentina’s Stand-By Arrangement, Approves US$5.4 Billion Disbursement

IMF News, July 12, 2019

Source details

Canonical URL: IMF Executive Board Completes Fourth Review Under Argentina’s Stand-By Arrangement, Approves US$5.4 Billion Disbursement

The Executive Board completed the fourth review of Argentina’s economic performance under the 36-month Stand-By Arrangement (SBA) that was approved on June 20, 2018.
Completion of the review allows the authorities to draw SDR 3.9 billion (about US$5.4 billion).
Total disbursements since June 2018 amount to SDR 31.91371 (about US$44.1 billion).

IMF Acting Managing Director and Chair David Lipton: “The Argentine authorities continue to show a strong commitment to their economic policy program, meeting all the applicable targets under the Fund-supported program.”
Financial markets have stabilized, the fiscal and external positions are improving, and the economy is beginning a gradual recovery from last year’s recession.

“Although inflation is still high, it is now on a downward path that is expected to continue in the coming months.”
“The BCRA’s prudent management of monetary policy remains an essential anchor for both the exchange rate and the disinflation process.”

“The Argentine government has consistently demonstrated its commitment to fiscal discipline and has well-exceeded its fiscal targets for March and June.”
Authorities requested IMF support to raise the end-September primary balance target to signal priority on placing Argentina’s debt-to-GDP ratio on a downward path.
The government met fiscal targets while protecting social programs and using fiscal tools to shield the most vulnerable from the recession.
Authorities requested IMF support to expand the social spending floor to incorporate assistance programs targeted at adults without children and low-income working mothers, aiming to expand coverage of the social safety net and improve gender equity.

Authorities are working to increase rollover rates on public debt and lengthen the maturity of new debt issuance to mitigate financing risks.
Ongoing efforts to improve the functioning of local sovereign debt markets aim to improve market liquidity and lower financing costs.

“Steadfast implementation of the policies underlying the IMF-supported program will be critical for continued progress.”
As macroeconomic stability becomes more entrenched, policy efforts should focus more on reinvigorating plans for structural reforms.
Identified reform areas:
- Redesign the tax system.
- Increase competition in domestic product markets.
- Deepen efforts to strengthen governance and confront corruption.
The recent MERCOSUR-EU trade agreement is noted as an important step toward raising growth potential, creating jobs, reducing poverty, and improving living standards.

Press Release No. 19/268, July 12, 2019 — IMF Communications Department.