IMF Executive Board Completes Second Review of the Extended Arrangement Under the Extended Fund Facility for Argentina

IMF News, October 7, 2022

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Canonical URL: IMF Executive Board Completes Second Review of the Extended Arrangement Under the Extended Fund Facility for Argentina

The Executive Board completed the second review of Argentina’s 30-month EFF arrangement.
The Board’s decision enables an immediate disbursement of SDR 3 billion (about US$3.8 billion).
Total disbursements under the arrangement now amount to about US$17.5 billion.
Argentina’s EFF arrangement access: SDR 31.914 billion (equivalent to US$44 billion, or about 1000 percent of quota).
The EFF arrangement was approved on March 25, 2022.

Relevant end-September quantitative program targets were met, including:
- End-September floor for net international reserves (met).
- Ceiling on monetary financing of the fiscal deficit (met).
The Board approved waivers of non-observance for the continuous performance criteria relating to exchange restrictions and multiple currency practices.
Given that the Board meeting occurred after end-September, waivers of applicability were also approved for two end-September targets—where data were not yet available—including the primary fiscal balance.

Recent decisive actions by the new economic team were assessed as critical to stabilizing markets and rebuilding confidence.
The authorities’ IMF-supported program aims to:
- Strengthen public finances.
- Tackle persistent high inflation.
- Boost reserve accumulation.
- Set the basis for sustained and inclusive economic growth.
In the context of a more challenging global backdrop and ongoing domestic risks, steadfast and continued program policy implementation going forward is emphasized as critical to achieve program objectives, entrench stability, and secure sustained and inclusive growth.

Fiscal primary deficit targets cited as critical:
- 2.5 percent of GDP in 2022.
- 1.9 percent of GDP in 2023.
Meeting these targets is said to be critical to:
- Moderate import growth.
- Accumulate reserves.
- Strengthen debt sustainability.
- Reduce reliance on central bank financing of the deficit.
Required fiscal measures include:
- Further strengthened expenditure controls.
- Increased efficiency of subsidies and social spending.
- Creating space for critical energy infrastructure projects and targeted assistance to the vulnerable.

Continued resolute implementation of the monetary policy framework is essential to:
- Sustain positive real interest rates.
- Tackle persistent high inflation.
- Encourage demand for peso assets.
- Increase external competitiveness.
- Boost reserves.
Targeted FX measures can temporarily support the balance of payments but are not a substitute for sound macroeconomic policy.
Exchange restrictions and multiple currency practices should be unwound as conditions permit and reserve coverage strengthens.

A proactive debt management approach, coupled with prudent macroeconomic policies, is necessary to:
- Mobilize domestic peso financing.
- Mitigate rollover risks.
Continued good faith efforts are needed to secure a successful restructuring of Paris Club debt.
Ensuring international partners deliver on financing commitments is critical to support key program objectives.

The structural reform agenda is highlighted as critical to address deep-seated economic challenges, including progress on:
- Strengthening public financial management.
- Strengthening monetary transmission and central bank finances.
- Strengthening frameworks to combat tax evasion and money laundering.
- Developing strong and stable regulatory frameworks to boost export potential in key sectors, including energy.

The IMF notes a more challenging global backdrop and ongoing domestic risks.
Resolute implementation of the program and agile policy making are considered critical to meet objectives and secure stability.
Broad political support for the program’s policies is emphasized as essential going forward.

IMF Press Release No. 22/344, October 7, 2022 — IMF Communications Department