Argentina: Ex-post Evaluation of Exceptional Access under the 2022 Extended Fund Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Argentina

IMF Staff Country Reports, January 10, 2025

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Argentina: Ex-post Evaluation of Exceptional Access under the 2022 Extended Fund Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Argentina

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Bibliographic details

• Published: January 10, 2025
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400299001.002

Overview

• The paper analyzes Argentina’s Ex-post Evaluation of Exceptional Access under the 2022 Extended Fund Facility (EFF) Arrangement.
• The 2022 EFF was agreed in extremely difficult circumstances following Argentina’s inability to regain external viability under the 2018 Stand-By Arrangement and large, concentrated repurchase obligations to the IMF.
• The program experienced a problematic start, faced large adverse shocks, and implementation weakened progressively, resulting in outcomes substantially worse than in the baseline by end-2023.
• A major course correction under the Milei government—sharp fiscal consolidation, an upfront devaluation, and an end to monetary financing of the budget—helped avert a full-blown crisis and advance macroeconomic stabilization.
• While the 2022 EFF did not achieve its original macroeconomic objectives, it succeeded in easing Argentina’s IMF repayment burden by rescheduling repayments over 2026–2034 and may have prevented worse outcomes in 2022–2023.

Key Findings

• Program genesis and context:
  • Argentina could not regain external viability under the 2018 Stand-By Arrangement.
  • The 2022 EFF was adopted amid large and concentrated IMF repurchase obligations.
• Drivers of underperformance:
  • A gradualist reform strategy combined with large adverse shocks and progressively weaker implementation.
  • Surge in global commodity prices due to Russia’s war in Ukraine fed inflation expectations.
  • Additional fiscal spending needs were met through direct and indirect monetization, further fueling inflation.
• Course correction and stabilization:
  • The Milei government implemented a sharp fiscal consolidation.
  • An upfront devaluation was undertaken.
  • Monetary financing of the budget was ended.
  • These measures helped avert a full-blown crisis and made important strides toward macroeconomic stabilization.
• Program outcomes:
  • The 2022 EFF did not meet its original macroeconomic objectives by end-2023.
  • The program eased Argentina’s IMF obligations by rescheduling repayments over 2026–2034.
  • The EFF may have helped Argentina avoid worse outcomes in 2022–2023.

Policy Implications and Recommendations (as reflected in the evaluation)

• Reinforce program implementation and ownership to avoid progressive weakening of reforms.
• Prioritize measures that prevent monetization of fiscal needs to contain inflationary pressures.
• Consider timely and decisive adjustments (e.g., devaluation, fiscal consolidation) when initial strategies underperform amidst large shocks.
• Use debt reprofiling (rescheduling repayments) to alleviate concentrated near-term external liabilities when appropriate.

Relevant Subjects and Keywords

• Subjects: Central banks, Fiscal consolidation, Fiscal policy, Foreign exchange, Inflation, International reserves, Prices, Reserves accumulation
• Keywords: disinflation process, Fiscal consolidation, Global, IMF view, Inflation, International reserves, lending decision, Policy strategy, program ownership, Reserves accumulation, risk tolerance

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• 1argea2025001-print-pdf
  • 1argea2025001-print-pdf (Markdown version)
  • 1argea2025001-print-pdf (PDF)