The International Monetary Fund (IMF)'s Executive Board Friday approved the fourth review of last year's Extended Facilities Program with Argentina, after which a US$ 5.4 billion disbursement for the South American country was cleared to proceed, it was reported in Washington DC.
However, the agency warned that stronger actions were needed to safeguard stability in the face of a challenging economic environment, in particular an increasingly severe drought, Fund Spokeswoman Julie Kozack told reporters.
In his recent visit to the White House, Argentine President Alberto Fernandez asked his US colleague Joseph Biden to support him before the IMF.
Argentina is suffering the worst drought since 1929 in its recent history. This has greatly complicated our economy and we are presenting this new reality to the lending agencies, Fernández said earlier this week.
”The Board decision makes possible an immediate disbursement of US$ 5.4 billion (SDR 4 billion), bringing total disbursements under the agreement to about US$ 28.9 billion,” the IMF said in a statement.
The money transfer immediately hit the Argentine Central Bank's coffers by Friday afternoon, which featured US$ 39.055 billion, some US$ 2.5 billion higher than Thursday's close, after deducting a US$ 2.9 billion payment that Argentina was to complete in March. The new surplus will be used to pay another IMF maturity in mid-April, it was explained.
The IMF Board's approval came after a technical team and the Argentine government agreed on March 13 on a review that included a reduction in the international reserves accumulation target for 2023 due to the effect of the drought on exports, while keeping the fiscal deficit target for this year unchanged (1.9% of the country's GDP).
Economy Minister Sergio Massa also met with IMF Deputy Managing Director Gita Gopinath this week to discuss the severe impact caused by the drought on the Argentine economy and the consequent drop in reserves.
Among other achievements by the Argentine Economy Ministry, this week was refinancing the debt with the creditor countries of the Paris Club. With the signing of the Paris Club agreement, the restrictions to access foreign trade credit from the United States for the Argentine private sector are lifted, Massa argued.
With the objective of continuing to order and regularize international financial relations and continuing the path we started in October last year when we signed the general agreement with The Paris Club, today we signed a specific bilateral agreement with the United States, he added.