## Press Release: IMF Approves US$12.55 Billion Three-Year Stand-By Credit for Argentina

_IMF News, September 20, 2003_

## Source details

**Canonical URL:** [Press Release: IMF Approves US$12.55 Billion Three-Year Stand-By Credit for Argentina](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr03160)

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## Bibliographic details
- Authors: Credit Arrangement
- Published: September 20, 2003

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### Executive summary
- The Executive Board of the International Monetary Fund approved a three-year, SDR 8.98 billion (about US$12.55 billion) Stand-By Credit Arrangement for Argentina to succeed the arrangement that expired on August 31, 2003 (Press Release No. 03/09).
- The Executive Board also approved the authorities' request for an extension of repayment expectations to an obligations schedule in an aggregate amount equivalent to SDR 1.74 billion (about US$2.43 billion).
- The Board discussion took place in Dubai, United Arab Emirates, ahead of the 2003 joint World Bank-IMF Annual Meetings.
- The IMF emphasized that decisive policy actions and strong policy ownership by Argentine authorities are crucial to minimize program risks.

### Program objectives and pillars
- Principal objectives:
  - Restore sustained growth.
  - Improve poverty and equity indicators.
  - Ensure debt sustainability and normalize relations with creditors.
- Three fundamental elements of the medium-term program:
  - A medium-term fiscal framework to meet growth, employment, and social equity objectives, while providing a sound basis for normalizing relations with all creditors and ensuring debt sustainability.
  - A strategy to assure the strength of the banking system and facilitate the increase in bank lending essential to support the recovery.
  - Institutional reforms to facilitate corporate debt restructuring, address issues of the utility companies, and improve the investment climate.

### Growth and inflation projections
- GDP growth targets:
  - 5.5 percent in 2003.
  - Around 4 percent in 2004-06.
- Inflation:
  - Core inflation is expected to be maintained in single digits.
  - Monetary program aims to anchor inflation expectations in the single digit range.

### Fiscal framework and commitments
- Primary surplus targets and commitments:
  - Raise the consolidated primary surplus from 2½ percent of GDP in 2003 to 3 percent in 2004.
  - Authorities committed to primary surpluses in subsequent years sufficient to ensure a sustainable fiscal position and to cover net payments on performing debt and obligations that may result under a debt restructuring agreement.
- Structural fiscal reforms:
  - Undertake further tax reform and secure early consensus on reforming intergovernmental relations.
  - Commitments to submit tax reform and intergovernmental reform legislation to Congress during 2004, with a view to their being introduced in the context of the 2005 budget.
- Sequencing:
  - Reforms are sequenced to build consensus and to be carried to a decisive stage in 2004.

### Monetary policy and banking reforms
- Monetary policy:
  - Continue to entrench low inflation expectations, with base money growth driven mainly by the accumulation of international reserves.
  - Authorities consider moving to an inflation targeting regime by end-2004.
  - Supportive reforms aimed at increasing the autonomy of the central bank, including studying proposals for enhancing the central bank's independence and moving to an inflation-targeting framework by end-2004.
- Banking strategy and commitments:
  - Implement a comprehensive banking restructuring strategy to entrench broad price stability and facilitate lending.
  - Commit to bring the regulatory and supervisory framework to international standards.
  - Foster restructuring and recapitalization of public and private banks.
  - Implement compensating measures to offset the impact of official sector actions on banks' balance sheets.
  - By end-2003, eliminate temporary forbearance on the classification and provisioning of private loans and compensate banks for asymmetric pesoization and asymmetric indexation.
  - Assess the impact of losses experienced by banks because of legal injunctions (amparos) and identify measures to strengthen the system by end of 2003.

### Debt restructuring, utilities, and legal framework
- Debt restructuring:
  - Authorities committed to advance negotiations with external creditors consistent with medium-term sustainability.
  - Aim to conclude negotiations by mid-2004.
- Utility sector:
  - Aim to obtain congressional approval by end-2003 of new legislation delegating powers to the executive branch to renegotiate public concessions and effect interim tariff increases.
- Predictable legal framework:
  - Commit to review the effectiveness of the insolvency system to put in place a legal and regulatory framework conducive to progress in private corporate debt restructuring.
- Fund view:
  - Early conclusion of a sustainable restructuring agreement, paving the way for Argentina to return to capital markets, is fundamental to the success of the program.

### Risks and implementation
- Recognized risks:
  - Key elements of fiscal and banking reforms crucial to sustainability will only be formulated at a later stage.
- Conditionalities for minimizing risks:
  - Decisive policy actions by Argentine authorities.
  - Strong policy ownership.
  - Progress on normalizing relations with creditors.

### Key statistics and institutional facts
- Stand-By Credit Arrangement:
  - SDR 8.98 billion (about US$12.55 billion) for three years.
- Extension of repayment expectations:
  - SDR 1.74 billion (about US$2.43 billion).
- Argentina IMF membership and quota:
  - Argentina joined the IMF on September 20,1956.
  - Quota is SDR 2.117 billion (about US$2.959 billion).
  - Outstanding use of IMF credit currently totals SDR 8.85 billion (about US$12.37 billion).

*Press Release No. 03/160 — September 20, 2003 — International Monetary Fund*

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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 Release No. 03/09](https://www.imf.org/external/np/sec/pr/2003/pr0309.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/pr03160_