{
  "title": "Press Release: IMF Augments Argentina Stand-By Credit to $21.57 Billion, and Completes Fourth Review",
  "publication": "IMF News, September 7, 2001",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0137",
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  "summary": "The Executive Board approved an augmentation to SDR 16.94 billion (about US$21.57 billion) of Argentina's stand-by credit initially approved on March 10, 2000 and augmented on January 2001.",
  "publishDate": "2001-09-07",
  "sections": [
    {
      "heading": "Executive decision and financing package",
      "content": "- The Executive Board approved an augmentation to SDR 16.94 billion (about US$21.57 billion) of Argentina's stand-by credit initially approved on March 10, 2000 and augmented on January 2001.\n- Immediate availability: SDR 4.94 billion (about US$6.3 billion), of which SDR 3.97 (about US$5.05 billion) are under the new augmentation.\n- Additional contingent drawdown: SDR 976.2 million (about US$1.24 billion) to be made available later in 2001 following completion of the fifth review.\n- Further scheduled tranches:\n  - 2002: SDR 5.44 billion (about US$6.93 billion).\n  - 2003: SDR 764 million (about US$ 973 million).\n- Flexibility for debt-profile operation: Up to the equivalent of US$3 billion of the drawings scheduled for 2002 may be brought forward to support a voluntary and market-based operation to improve Argentina's debt profile."
    },
    {
      "heading": "Rationale and Executive Board statement (Anne Krueger, First Deputy Managing Director and acting Chair)",
      "content": "- Purpose: Restore macroeconomic stability and address structural impediments to a recovery of investment and output through a strengthened fiscal effort in the reformulated program.\n- Fiscal credibility and convertibility:\n  - Program aims to restore credibility of the fiscal position and the convertibility regime.\n  - Fiscal policy geared to the immediate elimination of the federal government deficit as mandated by the \"zero-deficit law\" approved by congress in late July 2001.\n  - Provincial governments expected to undertake a substantial fiscal adjustment.\n- Expected macroeconomic effects if implemented firmly:\n  - Ensure sustainability of public debt.\n  - Produce a lasting decline in the risk premium on Argentine debt and of domestic interest rates.\n  - Create conditions for recovery of economic activity.\n- Structural reform priorities welcomed by the Fund:\n  - Improve tax administration and strengthen tax compliance.\n  - Reform revenue sharing arrangements between the federal government and the provinces.\n  - Streamline public administration and overhaul social security administration.\n  - Strengthen public banks, make labor markets more flexible, and improve effectiveness of the social safety net.\n- Financial stability pillars: Reaffirmation of commitment to the convertibility regime and liquidity defenses of the banking system.\n- Private sector involvement: Program provides for increased voluntary private sector involvement through bond placements and drawdown of the contingent repo facility with international banks; Fund welcomes voluntary market-based debt operation efforts."
    },
    {
      "heading": "Program summary and recent developments",
      "content": "- Background:\n  - Despite the January 2001 augmentation, doubts about sustainability of public debt resurfaced after authorities failed to sustain program fiscal policies.\n  - March ministerial crisis and economic weakness eroded confidence; domestic financial sector virtually refused to continue financing the government.\n- Market developments:\n  - Spreads on Argentine bonds: narrowed to about 880 basis points after third review approval in May, widened to over 1700 basis points in July, and narrowed to around 1,400 basis points in August.\n- Authorities' response: Announced major strengthening of fiscal effort to restore credibility and requested further IMF augmentation to dispel default doubts and calm depositors."
    },
    {
      "heading": "Key policy measures in the revised program",
      "content": "- Fiscal consolidation:\n  - Immediate elimination of the federal government deficit in line with the \"zero deficit\" law.\n  - New revenue measures:\n    - Increase in the financial transactions tax by 0.2 percent (to 0.6 percent) with elimination of all exemptions.\n    - Reversal of the reduction in gasoline taxes.\n    - Suspension of the increase in income tax deductions.\n    - Postponement indefinitely of the planned move of the VAT from an accrual to a cash basis.\n  - Primary spending cuts:\n    - Across-the-board cut of 13 percent in unprotected primary spending, including wages and pensions.\n- Social protection and program administration:\n  - Protections: Floor on salary and pension cuts; maintenance of targeted subsidies.\n  - Emphasis on efficient resource use: Better targeting and concentration of administration of social programs under a single facility."
    },
    {
      "heading": "Expected macroeconomic outcomes and projection",
      "content": "- If announced policies are firmly implemented:\n  - Expected lasting decline in the risk premium on Argentine debt and domestic interest rates.\n  - Conditions created for a modest recovery of real GDP growth in the final quarter of 2001.\n  - Projected growth: about 2.5 percent in 2002."
    },
    {
      "heading": "Argentina's IMF position and outstanding use of resources",
      "content": "- Argentina joined the IMF on September 20, 1956.\n- Quota: SDR 2.117 billion (about US$2.695 billion).\n- Outstanding use of IMF credit currently totals SDR 6.494 billion (about US$8.267 billion)."
    },
    {
      "heading": "Selected economic indicators (annual percentage changes; unless otherwise indicated)",
      "content": "- Real per capita GDP: 1997: 6.7; 1998: 2.6; 1999: -4.6; 2000: -1.7; Q1 2001 Prog: -2.6.\n- GDP at current prices: 1997: 7.6; 1998: 2.1; 1999: -5.2; 2000: 0.6.\n- GDP at constant prices: 1997: 8.1; 1998: 3.8; 1999: -3.4; 2000: -0.5; Q1 2001 Prog: -1.4.\n- Consumption: 1997: 7.9; 1998: 3.1; 1999: 1.0; 2000: -0.8; Q1 2001 Prog: -1.0.\n- Investment: 1997: 17.7; 1998: 6.5; 1999: -12.8; 2000: -8.6; Q1 2001 Prog: -9.2.\n- Net exports (contribution to growth): 1997: -1.8; 1998: 0.0; 1999: 1.4; 2000: 0.3; Q1 2001 Prog: 0.1.\n- Exports: 1997: 12.0; 1998: 9.9; 1999: 2.2; 2000: 5.9.\n- Imports: 1997: 26.6; 1998: -11.7.\n- GDP deflator: 1997: -1.9; 1998: 1.1; 1999: -0.3.\n- Industrial production (average): 1997: 8.7; 1998: 1.6; 1999: -6.4.\n- Consumer prices (average): 1997: 0.9; 1998: -1.2; 1999: -0.9; 2000: -0.6.\n- Consumer prices (end-of-period): 1997: 0.7; 1998: -0.7.\n- Exports, f.o.b.: 1997: 11.0; 1998: -11.8; 1999: 13.2; 2000: 3.7.\n- Imports, c.i.f.: 1997: 28.1; 1998: -18.7; 1999: -2.9; 2000: -3.9.\n- Export volume: 1997: 15.0; 1998: 11.6; 1999: 2.0; 2000: 4.8.\n- Import volume: 1997: 31.1; 1998: -13.8; 1999: -3.8.\n- Terms of trade (deterioration -): 1997: -5.5; 1998: -5.9; 1999: 10.4; 2000: 5.5.\n- Real effective exchange rate (Average (depreciation -)): 1997: 3.0; 1998: 3.5; 1999: 12.4.\n- Real effective exchange rate (Year-end (depreciation -)): 1997: 5.0; 1998: 12.6; 1999: 1.7; 2000: 4.4.\n- Banking system net domestic assets: 1997: 16.1; 1998: 14.6; 1999: 4.7; 2000: 3.3; Q1 2001 Prog: 3.2.\n  - Credit to private sector: 1997: 18.6; 1998: 10.8; 1999: -4.8; 2000: -6.0.\n- Money and quasi-money (M2): 1997: 20.3; 1998: 24.7; 1999: -2.4; 2000: -2.5; Q1 2001 Prog: -7.0; -9.0.\n- Velocity (GDP relative to M2): 1997: 8.5; 1998: 8.0; 1999: 7.8; 2000: 7.5.\n- Interest rate (30-day deposit rate, in percent) 1/: 1997: 7.0; 1998: 8.3.\n- Public sector savings (in percent of GDP): 1997: -0.4; 1998: -2.3.\n- Federal government primary balance (in percent of GDP): 1997: 0.4; 1998: -0.2; 1999: 1.5.\n- Federal government overall balance (in percent of GDP): 1997: -1.6; 1998: -1.3; 1999: -1.1; 2000: -2.7.\n- Consolidated public sector primary balance (in percent of GDP): 1997: 0.5.\n- Consolidated public sector overall balance (in percent of GDP): 1997: -4.2; 1998: -3.6; 1999: -3.7.\n- Gross domestic investment (in percent of GDP): 1997: 19.5; 1998: 19.9; 1999: 17.9; 2000: 16.0; Q1 2001 Prog: 14.9.\n- Gross national savings (in percent of GDP): 1997: 14.7; 1998: 15.1; 1999: 13.7; 2000: 12.8; Q1 2001 Prog: 11.9.\n- Current account deficit (in percent of GDP): 1997: -3.2; 1998: -4.4.\n- Public sector external debt (end-of-year, in percent of GDP): 1997: 25.6; 1998: 27.8; 1999: 30.1; 2000: 29.9; Q1 2001 Prog: 30.6; 32.1.\n- Public sector interest payments (in percent of exports of goods and nonfactor services) 2/: 1997: 24.3; 1998: 25.4; 1999: 31.0; 2000: 41.3; Q1 2001 Prog: 42.0.\n- Outstanding use of Fund resources (in percent of quota at end-of-period): 1997: 283.0; 1998: 251.5; 1999: 154.1; 2000: 183.3; Q1 2001 Prog: 276.0; 587.3.\n- Gross foreign exchange reserves 3/ (in months of imports of goods and nonfactor services): 1997: 9.6; 1998: 12.2; 1999: 12.5.\n\nPress Release No. 01/37 — September 7, 2001 — International Monetary Fund\n\n---\n\n\n References\n\n- Argentina and the IMF\n- Press Releases\n- PRESS CENTER\n- Press Release 00/17\n- Press Release 01/3\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0137"
    }
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    "Published: September 7, 2001",
    "The Executive Board approved an augmentation to SDR 16.94 billion (about US$21.57 billion) of Argentina's stand-by credit initially approved on March 10, 2000 and augmented on January 2001.",
    "Immediate availability: SDR 4.94 billion (about US$6.3 billion), of which SDR 3.97 (about US$5.05 billion) are under the new augmentation.",
    "Additional contingent drawdown: SDR 976.2 million (about US$1.24 billion) to be made available later in 2001 following completion of the fifth review.",
    "Further scheduled tranches:",
    "Flexibility for debt-profile operation: Up to the equivalent of US$3 billion of the drawings scheduled for 2002 may be brought forward to support a voluntary and market-based operation to improve Argentina's debt profile.",
    "Purpose: Restore macroeconomic stability and address structural impediments to a recovery of investment and output through a strengthened fiscal effort in the reformulated program.",
    "Fiscal credibility and convertibility:",
    "Expected macroeconomic effects if implemented firmly:",
    "Structural reform priorities welcomed by the Fund:",
    "Financial stability pillars: Reaffirmation of commitment to the convertibility regime and liquidity defenses of the banking system.",
    "Private sector involvement: Program provides for increased voluntary private sector involvement through bond placements and drawdown of the contingent repo facility with international banks; Fund welcomes voluntary market-based debt operation efforts.",
    "Background:",
    "Market developments:",
    "Authorities' response: Announced major strengthening of fiscal effort to restore credibility and requested further IMF augmentation to dispel default doubts and calm depositors.",
    "Fiscal consolidation:",
    "Social protection and program administration:",
    "If announced policies are firmly implemented:",
    "Argentina joined the IMF on September 20, 1956.",
    "Quota: SDR 2.117 billion (about US$2.695 billion).",
    "Outstanding use of IMF credit currently totals SDR 6.494 billion (about US$8.267 billion).",
    "Real per capita GDP: 1997: 6.7; 1998: 2.6; 1999: -4.6; 2000: -1.7; Q1 2001 Prog: -2.6.",
    "GDP at current prices: 1997: 7.6; 1998: 2.1; 1999: -5.2; 2000: 0.6.",
    "GDP at constant prices: 1997: 8.1; 1998: 3.8; 1999: -3.4; 2000: -0.5; Q1 2001 Prog: -1.4.",
    "Consumption: 1997: 7.9; 1998: 3.1; 1999: 1.0; 2000: -0.8; Q1 2001 Prog: -1.0.",
    "Investment: 1997: 17.7; 1998: 6.5; 1999: -12.8; 2000: -8.6; Q1 2001 Prog: -9.2.",
    "Net exports (contribution to growth): 1997: -1.8; 1998: 0.0; 1999: 1.4; 2000: 0.3; Q1 2001 Prog: 0.1.",
    "Exports: 1997: 12.0; 1998: 9.9; 1999: 2.2; 2000: 5.9.",
    "Imports: 1997: 26.6; 1998: -11.7.",
    "GDP deflator: 1997: -1.9; 1998: 1.1; 1999: -0.3.",
    "Industrial production (average): 1997: 8.7; 1998: 1.6; 1999: -6.4.",
    "Consumer prices (average): 1997: 0.9; 1998: -1.2; 1999: -0.9; 2000: -0.6.",
    "Consumer prices (end-of-period): 1997: 0.7; 1998: -0.7.",
    "Exports, f.o.b.: 1997: 11.0; 1998: -11.8; 1999: 13.2; 2000: 3.7.",
    "Imports, c.i.f.: 1997: 28.1; 1998: -18.7; 1999: -2.9; 2000: -3.9.",
    "Export volume: 1997: 15.0; 1998: 11.6; 1999: 2.0; 2000: 4.8.",
    "Import volume: 1997: 31.1; 1998: -13.8; 1999: -3.8.",
    "Terms of trade (deterioration -): 1997: -5.5; 1998: -5.9; 1999: 10.4; 2000: 5.5.",
    "Real effective exchange rate (Average (depreciation -)): 1997: 3.0; 1998: 3.5; 1999: 12.4.",
    "Real effective exchange rate (Year-end (depreciation -)): 1997: 5.0; 1998: 12.6; 1999: 1.7; 2000: 4.4.",
    "Banking system net domestic assets: 1997: 16.1; 1998: 14.6; 1999: 4.7; 2000: 3.3; Q1 2001 Prog: 3.2.",
    "Money and quasi-money (M2): 1997: 20.3; 1998: 24.7; 1999: -2.4; 2000: -2.5; Q1 2001 Prog: -7.0; -9.0.",
    "Velocity (GDP relative to M2): 1997: 8.5; 1998: 8.0; 1999: 7.8; 2000: 7.5.",
    "Interest rate (30-day deposit rate, in percent) 1/: 1997: 7.0; 1998: 8.3.",
    "Public sector savings (in percent of GDP): 1997: -0.4; 1998: -2.3.",
    "Federal government primary balance (in percent of GDP): 1997: 0.4; 1998: -0.2; 1999: 1.5.",
    "Federal government overall balance (in percent of GDP): 1997: -1.6; 1998: -1.3; 1999: -1.1; 2000: -2.7.",
    "Consolidated public sector primary balance (in percent of GDP): 1997: 0.5.",
    "Consolidated public sector overall balance (in percent of GDP): 1997: -4.2; 1998: -3.6; 1999: -3.7.",
    "Gross domestic investment (in percent of GDP): 1997: 19.5; 1998: 19.9; 1999: 17.9; 2000: 16.0; Q1 2001 Prog: 14.9.",
    "Gross national savings (in percent of GDP): 1997: 14.7; 1998: 15.1; 1999: 13.7; 2000: 12.8; Q1 2001 Prog: 11.9.",
    "Current account deficit (in percent of GDP): 1997: -3.2; 1998: -4.4.",
    "Public sector external debt (end-of-year, in percent of GDP): 1997: 25.6; 1998: 27.8; 1999: 30.1; 2000: 29.9; Q1 2001 Prog: 30.6; 32.1.",
    "Public sector interest payments (in percent of exports of goods and nonfactor services) 2/: 1997: 24.3; 1998: 25.4; 1999: 31.0; 2000: 41.3; Q1 2001 Prog: 42.0.",
    "Outstanding use of Fund resources (in percent of quota at end-of-period): 1997: 283.0; 1998: 251.5; 1999: 154.1; 2000: 183.3; Q1 2001 Prog: 276.0; 587.3.",
    "Gross foreign exchange reserves 3/ (in months of imports of goods and nonfactor services): 1997: 9.6; 1998: 12.2; 1999: 12.5.",
    "[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)",
    "[Press Release 01/3](https://www.imf.org/external/np/sec/pr/2001/pr0103.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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