IMF frees up US$3.8 billion more in funds for Argentina

The International Monetary Fund’s (IMF) board on Friday (Oct 7) approved a new loan tranche of US$3.8 billion to debt-plagued Argentina, the crisis lender said in a statement.

The decision, approved by the IMF’s technical teams in September, was taken at the end of the second review of the Extended Fund Facility worth a total of US$44 billion over 30 months.

The latest tranche brings to US$17.5 billion the total disbursed to Buenos Aires to strengthen the country’s economic stability and promote sustainable growth.

“In response to the market disruptions of mid-2022, Argentina’s new economic team adopted decisive corrective measures that are starting to restore confidence and policy credibility,” IMF Managing Director Kristalina Georgieva said in a statement.

Georgieva’s praise appeared aimed at Argentina’s new economic minister Sergio Massa, who pledged in early August to honour the commitment with the IMF to reduce the country’s public deficit to 2.5 per cent this year.

But she nevertheless described the economic situation as “fragile,” and noted that “prudent macroeconomic policies and steadfast program implementation” including expenditure controls and tighter social spending will still be needed.

“Achieving the fiscal primary deficit targets of 2.5 per cent of GDP in 2022 and 1.9 per cent of GDP in 2023 is critical to moderate import growth, accumulate reserves, strengthen debt sustainability, and further reduce reliance on central bank financing of the deficit,” she said.

The agreement with the IMF, signed last March, provides for a series of measures aimed at controlling the country’s chronic inflation – which soared to 50.9 per cent last year and 71 per cent year-on-year in July 2022 – and reducing its public deficit towards equilibrium in 2025.

President Alberto Fernandez’s government, under the IMF deal, must boost its international reserves and reduce the fiscal deficit from 3 per cent of gross domestic product in 2021 to 2.5 per cent this year, 1.9 per cent in 2023 and 0.9 per cent in 2024.

SEE ALSO

IMF board approves US$1.3b in emergency funding for Ukraine

IMF says wage-price spirals are rare, but rate hikes needed to quell inflation expectations

IMF tells UK to ‘re-evaluate’ tax cut as global criticism mounts

It is the 13th agreement between the IMF and Argentina since the country returned to democracy in 1983. AFP