Press Release No. 19/268

IMF Executive Board Completes Fourth Review Under Argentina’s Stand-By Arrangement, Approves US$5.4 Billion Disbursement

July 12, 2019

The Executive Board of the International Monetary Fund (IMF) completed today the fourth review of Argentina’s economic performance under the 36-month Stand-By Arrangement (SBA) that was approved on June 20, 2018. The completion of the review allows the authorities to draw SDR 3.9 billion (about US$5.4 billion), bringing total disbursements since June 2018 to SDR 31.91371 (about US$44.1 billion).

Following the Executive Board discussion of Argentina’s economic plan, Mr. David Lipton, the IMF’s Acting Managing Director and Chair, stated:

“The Argentine authorities continue to show a strong commitment to their economic policy program, meeting all the applicable targets under the Fund-supported program. While it has taken time, these policy efforts are starting to bear fruit. Financial markets have stabilized, the fiscal and external positions are improving, and the economy is beginning a gradual recovery from last year’s recession. The Fund is strongly supportive of these important policy efforts.

“Although inflation is still high, it is now on a downward path that is expected to continue in the coming months. The BCRA’s prudent management of monetary policy remains an essential anchor for both the exchange rate and the disinflation process.

“The Argentine government has consistently demonstrated its commitment to fiscal discipline and has well-exceeded its fiscal targets for March and June. The authorities have asked the IMF to support raising the end-September primary balance target as a signal of their priority of ensuring that Argentina’s debt-to-GDP ratio is placed decisively on a downward path.

“The government was able to meet its fiscal targets while also protecting social programs and using fiscal tools to shield the most vulnerable from the effects of the recession. The authorities have also requested the IMF to support an expansion of the social spending floor to incorporate assistance programs targeted at adults without children and low-income working mothers. These commendable efforts will both expand coverage of the social safety net and help improve gender equity.

“The authorities’ efforts to increase rollover rates on public debt and to lengthen the maturity of new debt issuance should help mitigate financing risks in the period ahead. Ongoing efforts to improve the functioning of local sovereign debt markets will help improve market liquidity and lower financing costs.

“Steadfast implementation of the policies underlying the IMF-supported program will be critical for continued progress. As macroeconomic stability becomes more entrenched, policy efforts will need to focus more on reinvigorating plans for structural reforms. The recent MERCOSUR-EU trade agreement is an important step in that direction. Further efforts are needed to redesign the tax system; increase competition in domestic product markets; and deepen efforts to strengthen governance and confront corruption. Such reforms have significant potential to raise Argentina’s growth potential, create jobs, reduce poverty, and improve the standard of living for all Argentineans.”