MercoPress. South Atlantic News Agency

Argentina passes IMF test, gets US$ 3.8 billion

The Argentine Government expects another US$ 5.8 billion from the IMF soon

The International Monetary Fund's Board of Directors Friday approved the 2022 second semester review, thus clearing the way for a US$ 3.8 billion disbursement in favor of Argentina.

On making this decision, the IMF argued that the Argentine government “took decisive corrective measures that are beginning to restore confidence and policy credibility.” Under the 30-month Extended Facilities Agreement (EFF) approved on March 25, 2022, some US$ 17.5 billion have been awarded to the South American country.

“Prudent macroeconomic policies and strong program implementation will be needed to address the still fragile situation, strengthen stability, and achieve the objectives of the authorities' Fund-supported program, which remains a key macroeconomic anchor,” the IMF said in a statement.

Achieving the primary fiscal deficit targets of 2.5% of GDP in 2022 and 1.9% in 2023 is “critical to moderating import growth, accumulating reserves, strengthening debt sustainability, and further reducing reliance on central bank deficit financing,” IMF Managing Director Kristalina Georgieva said.

It “will require strengthened expenditure controls and greater efficiency of subsidies and social spending, which in turn would create space for critical energy infrastructure projects and targeted assistance to the vulnerable,” she added.

The Executive Board of the International Monetary Fund (IMF) announced that the second review was completed, which will allow for an immediate disbursement of about US$ 3.8 billion.

In this scenario, Superminister Sergio Massa will travel to Washington next week to participate in the Annual Meeting of the IMF and the World Bank and in the summit of G20 Finance Ministers and Central Bank Governors on a mission to consolidate foreign support to the stabilization of the Argentine economy and strengthen the country's reserves through additional markets for Argentine exports and promote further investments in strategic sectors.

“The Board also approved waivers of non-compliance with ongoing performance criteria related to foreign exchange restrictions and multiple currency practices,” the IMF statement pointed out.

“Continued progress is needed to strengthen public financial management, monetary transmission, and central bank finances, as well as frameworks to combat tax evasion and money laundering. Similarly, strong and stable regulatory frameworks can help boost Argentina's export potential in key sectors, including energy,” Georgieva also noted while underlining the need for continued good faith efforts by all parties to ensure a successful restructuring of Argentina's debt with the Paris Club, which was subject to the agreement with the Monetary Fund.

The Argentine Government expects to make faster progress in the endorsement of the third quarter targets, whose approval will imply a disbursement of another US$ 5.8 billion.