Washington, DC:
The Executive Board of the International Monetary Fund (IMF) completed
today the first review of the extended arrangement under the Extended Fund
Facility (EFF) for Argentina. Against the backdrop of increased global
uncertainties, the Executive Board assessed that all end-March 2022 and
continuous performance criteria and indicative targets were met, and that
initial progress was made on the structural front. It also welcomed the
authorities’ commitment to implement policies consistent with the unchanged
annual program objectives. The Executive Board’s decision enables an
immediate disbursement of SDR 3 billion (about US$ 4.01 billion) and marks
the conclusion of an important initial step under the program which aims to
support Argentina’s ongoing economic recovery, strengthen macroeconomic
stability, and begin to address its deep-seated challenges.
Argentina’s 30-month EFF arrangement, with access of SDR 31.914 billion
(equivalent to US$44 billion, or about 1000 percent of quota), was approved
on March 25, 2022 (see Press Release No. 22/89). The authorities’
IMF-supported program provides Argentina with balance of payments and
budget support that is tied to specific measures to strengthen public
finances, tackle persistent high inflation, boost reserve accumulation, and
set the basis for more sustainable and inclusive economic growth.
Following the Executive Board discussion on Argentina, Ms. Kristalina
Georgieva, Managing Director, issued the following statement:
“The Argentine economy is continuing its post-pandemic recovery, but is
being affected by shocks associated with the war in Ukraine and broader
global uncertainties. Higher global food and energy prices are adding to
inflation pressures and challenging fiscal and reserve accumulation goals.
Notwithstanding these shocks, the authorities met all end-March 2022
quantitative targets and have made progress toward implementing the
structural commitments under the program.
“The authorities recognize the importance of investing in economic
stability and maintained the end-year program objectives with some
flexibility in the quarterly paths to accommodate the shocks. To this end,
the recently modified 2022 budget reprioritizes spending to accommodate
higher energy subsidies and appropriate social assistance to protect the
vulnerable from the food price shock. Adhering to the primary fiscal
deficit target of 2.5 percent of GDP in 2022 is essential to moderate
domestic demand, limit monetary financing of the deficit, and support
reserve accumulation, and will require steadfast implementation and
monitoring of budget commitments. Sustained efforts are also needed to
improve tax compliance, reduce energy subsidies, and strengthen public
financial management.
“The authorities remain committed to the agreed multi-pronged strategy to
tackle persistent high inflation, including by continuing to normalize
policy interest rates consistent with achieving positive real interest
rates. Steadfast implementation of the enhanced monetary policy framework
will be essential to encourage demand for peso assets, preserve external
competitiveness, and support unchanged end-year reserve accumulation
targets.
“In the context of recent market volatility, efforts to strengthen and
deepen the peso debt market—which is an essential pillar of the 30-month
EFF— remain critical, alongside steadfast implementation of fiscal targets.
In addition, ensuring the timely delivery of financial commitments from
Argentina’s international partners is vital to help boost reserve buffers
and support reform efforts.
“Continued progress is needed in implementing the structural reform agenda,
including to strengthen public expenditure management, central bank
finances, the AML/CFT regime, as well as the development of key sectors
through enhancements in the predictability and effectiveness of regulatory
frameworks.
“Decisive implementation of program policies will be critical to support
Argentina’s economic recovery, strengthen macroeconomic stability, and make
further progress in addressing its deep-seated challenges to set the basis
for more sustainable and inclusive growth.”
