## Press Release: IMF Approves Augmentation of Argentina's Stand-By Credit _IMF News, January 12, 2001_ ## Source details **Canonical URL:** [Press Release: IMF Approves Augmentation of Argentina's Stand-By Credit](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0103) ## Other formats - [Markdown version](/en/news/articles/2015/09/14/01/49/pr0103/index.md) - [Structured JSON version](/en/news/articles/2015/09/14/01/49/pr0103/index.json) - [Bundle manifest](/en/news/articles/2015/09/14/01/49/pr0103/bundle-manifest.json) ## Bibliographic details - Authors: Credit Press Release No. - Published: January 12, 2001 --- ### Approval and Financial Support Package - The Executive Board approved an augmentation to SDR 10.6 billion (about US$14 billion) of Argentina's stand-by credit first approved on March 10, 2000. - SDR 2.1 billion (about US$3 billion) of the augmented total will be provided under the Supplemental Reserve Facility (SRF). - SDR 2.25 billion (about US$3 billion) made available immediately following completion of the second review of Argentina's program. - Three additional drawings of SDR 976.2 million (about US$1.3 billion) each to be made available during the remainder of 2001 following further reviews, the first expected to take place towards the end of the first quarter. - Further credit scheduled, according to a schedule yet to be specified: - 2002: SDR 3 billion (about US$4 billion) - 2003: SDR 764 million (about US$1 billion) - Argentine authorities arranged a financial support package totaling about US$39.7 billion from official and private sources, which includes: - About US$5 billion in new loan commitments from the Inter-American Development Bank and the World Bank. - US$1 billion in a loan from Spain. - About US$20 billion of financing from the private sector based on a market-based, voluntary approach. ### IMF Statement and Program Objectives - Stanley Fischer, First Deputy Managing Director and Acting Chairman of the Board, summarized the authorities' program aims: - Promote economic growth and ensure medium-term sustainability of the fiscal and external financial situations. - Restore confidence at home and abroad and protect the country's convertibility regime. - Program measures highlighted: - Elimination of tax disincentives to promote investment, including phasing out the 15 percent tax on interest paid by enterprises by July 2002. - Creation of a private sector infrastructure fund and an increase in public investment. - Structural fiscal reforms including a new fiscal pact with the provinces, reform to the social security system, and measures to improve tax enforcement. - Opening national health care to competition; deregulation and promotion of competition in energy and telecommunications; renegotiation of expiring contracts with privatized enterprises; elimination over two years of the 3 percent import surcharge; continued implementation of labor reform approved by Congress in May 2000. - Market reactions noted as positive: spreads on Argentine bonds and domestic interest rates declined significantly in recent weeks and the stock market rebounded strongly. ### Program Summary and Projections - Economic performance in 2000 was worse than expected; failure to recover from the recession since mid-1998. - Authorities' response: strengthen policy framework, accelerate structural reform efforts, maintain current convertibility regime, and promote recovery of investment as the foundation for domestic demand and output recovery. - New policy measures to stimulate investment include allowing partial deductibility of interest paid on new mortgage loans. - Growth and output projections: - A gradual recovery in demand and output expected to begin in the first quarter of 2001. - Average rate of GDP growth in 2001 projected at around 2 ½ percent. - Investment projected to rise by nearly 6 percent in 2001, following a cumulative decline of 20 percent in 1999-2000. - Consumer prices likely to remain flat reflecting the still large output gap and labor market slack. - External and fiscal objectives: - Program aims at gradual reduction of the external account deficit, contributing to lowering external debt to GDP ratio below 50 percent by 2006. - Authorities accept in the short run an only moderate reduction in the federal fiscal deficit to 2.2 of the projected GDP to avoid a strong contractionary fiscal impact. - Commitment to medium-term fiscal sustainability: reform of the pension system and a fiscal pact with the provinces to attain budget balance at both the federal and the provincial level by 2005, at the latest. ### Argentina: Selected Economic Indicators (Prel.) - National income and prices (annual percentage change) - GDP at current prices: 1996: 5.1; 1997: 7.6; 1998: 2.1; 1999: -5.2; 2000: 0.8 - GDP at constant prices: 1996: 5.5; 1997: 8.1; 1998: 3.8; 1999: -3.4; 2000: -0.2 - GDP deflator: 1996: -0.4; 1997: -0.5; 1998: -1.7; 1999: -1.9; 2000: 1.0 - Consumer prices (e.o.p.): 1996: 0.1; 1997: 0.3; 1998: 0.7; 1999: -1.8; 2000: -0.7 - External sector (annual percentage change) - Export volume: 1996: 6.7; 1997: 13.9; 1998: 11.6; 1999: 3.0; 2000: — - Import volume: 1996: 19.6; 1997: 30.2; 1998: 4.0; 1999: -13.9; 2000: -1.0 - Terms of trade (deterioration -): 1996: 7.8; 1997: -1.2; 1998: -5.5; 1999: -5.9; 2000: 9.7 - Money and credit (annual percentage change) - Domestic credit (net): 1996: 9.8; 1997: 17.4; 1998: 10.7; 1999: 3.3; 2000: — - Private sector deposits: 1996: 22.1; 1997: 27.0; 1998: 15.8; 1999: 2.8; 2000: 7.4 - Interest rates (average) - 31-60-day peso time deposits: 1996: 7.3; 1997: 7.0; 1998: 8.4; 1999: — - 30-day peso prime rate: 1996: 10.5; 1997: 9.1; 1998: 10.6; 1999: 10.8; 2000: 11.0 - National accounts (in percent of GDP) - Gross domestic investment: 1996: 18.1; 1997: 19.4; 1998: 19.9; 1999: 17.9; 2000: 15.9 - Gross national savings: 1996: 15.7; 1997: 15.3; 1998: 15.2; 1999: 13.5; 2000: 12.6 - Public finances (in percent of GDP) - Federal government primary balance: 1996: -0.8; 1997: 0.4; 1998: 0.9; 1999: —; 2000: — - Federal government overall balance: 1996: -2.5; 1997: -1.6; 1998: -1.3; 1999: -2.4; 2000: — - Overall public sector: 1996: -3.2; 1997: -2.1; 1998: -4.2; 1999: -3.6; 2000: — - Current account (deficit -) and external debt (in percent of GDP) - Current account (deficit -): 1996: -4.1; 1997: -4.8; 1998: -4.4; 1999: — - External public debt: 1996: 25.5; 1997: 27.6; 1998: 30.0; 1999: 32.0; 2000: — - Public sector external debt service1/: 1996: 33.8; 1997: 40.1; 1998: 35.3; 1999: 46.0; 2000: 46.6 - Level and flow indicators (in billions of US dollars, unless otherwise stated) - GDP (in billions of Arg$): 1996: 272.2; 1997: 292.9; 1998: 299.0; 1999: 283.2; 2000: 285.5 - Unemployment rate (percent): 1996: 17.2; 1997: 14.2; 1998: 12.9; 1999: 15.0; 2000: — - Exports, f.o.b. (US$ billion): 1996: 24.0; 1997: 26.4; 1998: 23.3; 1999: 26.2; 2000: — - Imports, c.i.f. (US$ billion): 1996: -23.9; 1997: -30.5; 1998: -31.4; 1999: -25.5; 2000: -25.3 - Current account of balance of payments (US$ billion): 1996: -6.4; 1997: -12.0; 1998: -14.3; 1999: -12.4; 2000: -9.9 - Overall balance of payments (US$ billion): 1996: 3.4; 1997: 3.6; 1998: 4.2; 1999: 1.8; 2000: — - Membership and IMF exposure - Argentina joined the IMF on September 20, 1956. - Its quota is SDR 2.117 billion (about US$3 billion). - Its outstanding use of IMF credit currently totals SDR 2.232 billion (about US$3 billion). *International Monetary Fund press release, January 12, 2001.* --- ## References - [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [Press Release 00/17](https://www.imf.org/external/np/sec/pr/2000/pr0017.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0103_