Press Release No. 22/226

IMF Executive Board Completes First Review of the Extended Arrangement Under the Extended Fund Facility for Argentina

June 24, 2022

• The IMF Executive Board completed today the first review of the extended arrangement under the Extended Fund Facility (EFF) for Argentina, enabling an immediate disbursement of about US$ 4.01 billion.
• The authorities met all end-March 2022 and continuous performance criteria and remain committed to achieve the program’s unchanged annual fiscal, monetary financing, and reserve accumulation objectives.
• 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.

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.”