## Press Release: IMF Approves Transitional Stand-By Credit Support for Argentina

_IMF News, January 24, 2003_

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**Canonical URL:** [Press Release: IMF Approves Transitional Stand-By Credit Support for Argentina](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0309)

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## Bibliographic details
- Authors: Credit Support
- Published: January 24, 2003

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### Stand-By Arrangement and Coverage
- The Executive Board approved an eight-month Stand-by Credit Arrangement for Argentina of SDR 2.17 billion (about US$2.98 billion).
- The arrangement is designed to provide transitional financial support through the period ending August 31, 2003, and replaces Argentina's previous arrangement with the Fund.
- The arrangement is designed to cover all payment obligations to the IMF through August 2003.
- The transitional stand-by credit is expected to be succeeded by a multi-year IMF arrangement after the election in late April 2003 of a new government.

### Extension of Repurchase Expectations and Combined Impact
- The Executive Board approved the authorities' request to extend by one year SDR 2.77 billion (about US$3.80 billion) in payments Argentina would have been expected to make during the first eight months of 2003.
- The extension covers:
  - Remaining payment under the Supplemental Reserve Facility (SRF): SDR 2.09 billion (about US$2.87 billion).
  - Payments under the previous Stand-by arrangement: SDR 683.65 million (about US$938.20 million).
- The combined actions affect SDR 4.94 billion (about US$6.78 billion) in payment obligations or expectations in the period January-August 2003.
- The extension is allowed under the Fund's general policies governing such payment expectations, including policies under the SRF; at the end of the extension the country is obligated to repay the SRF financing.

### Program Objectives and Context (Managing Director Statement)
- Purpose: preserve macroeconomic stability through the transition to a new government expected to take office in May and provide a framework for multilateral development banks to resume support of social programs following Argentina’s clearance of arrears.
- Key focuses:
  - Maintaining monetary and fiscal discipline.
  - Avoiding policy reversals.
  - Rebuilding legal certainty.
  - Strengthening collaboration with private creditors on a debt restructuring strategy, with momentum expected after early appointment of a debt advisor.
- Emphasis on the successor comprehensive medium-term program to:
  - Re-establish investor confidence and capital inflows.
  - Achieve fiscal and external viability.
  - Establish sustainable growth.
  - Carry forward fundamental reforms including structural fiscal reforms, increasing openness, restoring financial intermediation, completing debt restructuring, and assuring legal certainty and respect for the rule of law.

### Monetary Program (Operational Details)
- Objective: restrain monetary growth to establish a nominal anchor and avoid inflationary pressure.
- Centered on maintaining the adjusted monetary base broadly at its end-December 2002 level through mid-2003.
- Operational controls:
  - Act on net domestic assets of the central bank.
  - Limit sales of foreign exchange reserves for intervention.
  - Continue a flexible exchange rate policy.
- The monetary program would be reviewed regularly and the authorities committed to adopt corrective measures as necessary.

### Fiscal Program (Targets and Measures)
- Target: secure a consolidated cash primary surplus of about 2.5 percent of GDP in 2003.
- Measures required:
  - Spending cuts, revenue measures, and elimination of certain tax exemptions to be approved by Congress by end-March 2003.
  - Provincial adjustment via spending controls and administrative reforms.
  - Bilateral agreements for 2003 planned to be ratified by provincial legislatures by mid-May 2003.
- Authorities intend to work closely with Congress to secure approval of revenue measures needed to meet fiscal targets.
- Commitment to remain current on the government's financial obligations to the IMF under the program.

### Banking Strategy and Structural Measures
- Steps toward a banking strategy include:
  - Strengthening the regulatory and prudential framework.
  - Initiating reform of public banks.
  - Increasing central bank autonomy.
- Other structural measures:
  - Tax reform aimed at broadening the tax base.
  - Reform of intergovernmental relations to encourage fiscal discipline in the provinces.
  - Institutional and legal reforms to strengthen the framework for banking sector restructuring.
- Program provides for a strong social safety net implemented in collaboration with the World Bank and the IDB.

### Multilateral Bank Relations and Debt Position
- Argentina has cleared its arrears to the World Bank and the Inter American Development Bank, enabling these institutions to resume their support.
- Argentina’s IMF-related statistics:
  - Joined the IMF on September 20, 1956.
  - Quota is SDR 2.117 billion (about US$2.905 billion).
  - Outstanding use of IMF credit currently totals SDR 9.747 billion (about US$13.376 billion).

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## 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 Releases No. 01/37](https://www.imf.org/external/np/sec/pr/2001/pr0137.htm)
- [No. 01/3](https://www.imf.org/external/np/sec/pr/2001/pr0103.htm)
- [No. 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/pr0309_