## IMF Executive Board Completes the Combined Fifth and Sixth Reviews of the Extended Arrangement Under the Extended Fund Facility for Argentina

_IMF News, August 23, 2023_

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**Canonical URL:** [IMF Executive Board Completes the Combined Fifth and Sixth Reviews of the Extended Arrangement Under the Extended Fund Facility for Argentina](https://www.imf.org/en/news/articles/2023/08/23/pr23290-argentina-imf-executive-board-completes-combined-fifth-sixth-rev-extended-arr-under-eff)

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## Bibliographic details
- Published: August 23, 2023

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### Executive Board decision and disbursement
- The Executive Board completed the fifth and sixth reviews of Argentina’s 30-month Extended Fund Facility (EFF).
- The Board’s decision enables an immediate disbursement of around US$7.5 billion (SDR 5.5 billion).
- Total disbursements under the arrangement now amount to about US$36 billion.
- The next review is scheduled for November 2023.

### Program performance, missed targets, and waivers
- Key program targets were missed through end-June 2023 due to the historic drought along with policy slippages.
- The Board approved waivers of non-observance for missed targets through end-June 2023.
- The Board also approved waivers of non-observance associated with the introduction of temporary measures that gave rise to introduction or intensification of exchange restrictions and multiple currency practices.
- Modifications were approved to the reserve accumulation target, the primary fiscal balance target, and the monetary financing of the deficit targets.

### New policy package and core objectives
- Agreement was reached on a new policy package centered on rebuilding reserves and enhancing fiscal order.
- The package aims to correct policy setbacks, safeguard stability, and secure program objectives.
- Continued strong policy implementation is emphasized as critical to safeguard stability and strengthen medium-term sustainability.

### Fiscal targets and measures
- The agreed primary fiscal deficit target for this year is 1.9 percent of GDP.
- Fiscal consolidation is to accelerate beyond this year through high quality revenue and expenditure measures.
- Measures highlighted to achieve fiscal targets:
  - Strengthening expenditure controls through upfront measures to update energy tariffs.
  - Containing public wages and pensions while protecting priority social and infrastructure spending.
  - Temporary increases in FX taxes on selected goods and services to help offset the loss of drought-related export receipts.
- Objective: eliminate monetary financing of the deficit, support disinflation, and strengthen the central bank’s balance sheet.

### Monetary and exchange rate policy
- Recent realignment of the exchange rate, coupled with tightening of monetary policy, is intended to support reserve accumulation while limiting exchange rate passthrough to inflation.
- Going forward:
  - The rate of crawl will be carefully calibrated to help achieve reserve accumulation and disinflation goals.
  - Real interest rates will remain sufficiently positive to continue to support demand for peso assets.
  - Interventions in the securities and futures FX market will be limited and temporary, focused on addressing disorderly conditions.
- Multiple currency practices, exchange restrictions, and capital flow management measures will be unwound gradually as soon as conditions permit.

### Structural and inclusive-growth considerations
- There was recognition of the importance to boost Argentina’s export potential and reserves.
- Completion of the first phase of the gas pipeline was noted as a welcome development.
- Attention will continue to be given to protecting the poor and supporting inclusive growth as imbalances are addressed.

### Risks, implementation, and political considerations
- Decisive program implementation, agile policymaking, and contingency planning remain imperative; further measures may be needed to achieve program objectives and safeguard stability.
- Broad political support and program ownership are critical in the near and medium term; resolving the country’s deep challenges will require continued efforts by future administrations.
- Argentina’s continued commitment to remain current on its financial obligations to the Fund is welcomed.

*Press Release No. 23/290, August 23, 2023.*

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## References

- [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)
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_Source: https://www.imf.org/en/news/articles/2023/08/23/pr23290-argentina-imf-executive-board-completes-combined-fifth-sixth-rev-extended-arr-under-eff_