MercoPress. South Atlantic News Agency

Argentina makes payment to IMF through CAF loan

Argentina is said to be looking at fewer surcharges from the IMF next year

Less than two weeks into the term of President Javier Milei, Argentina Thursday made a payment to the International Monetary Fund (IMF) worth US$ 921 million thanks to a loan from the Development Bank of Latin America (CAF), it was reported in Buenos Aires.

The South American country's situation before the IMF is expected to change after the credit agency approved a 50% increase in the amount of the quotas that correspond to each member country. Now, Argentina's quota will amount to US$ 5.7 billion (SDR 4.78 billion), which means Argentina would have to contribute an additional US$ 2.13 billion, but at the same time it could pay less in surcharges.

”On December 15, 2023, the Board of Governors of the International Monetary Fund (IMF) concluded the Sixteenth General Review of Quotas and approved a 50% increase in member countries' quotas (SDR 238.6 billion, or US$ 320 billion), bringing total quotas to SDR 715.7 billion (US$ 960 billion),“ the IMF announced.

”Quotas are the fundamental components of the IMF's financial and governance structure. Each member joining the IMF is assigned a quota, and it is their obligation to pay their subscription in full,” it also said.

At current SDR values, Argentina should additionally contribute US$ 2.13 billion amid dwindling or negative reserves, a trend that seems to be reversing since the 55% devaluation two days after Milei took office.

Argentina has a loan in force with the IMF that is tantamount to about 975% of its quota, which generates interest surcharges. By increasing the amount of the quota, Argentina's loan would exceed its indebtedness ceiling by less, which should result in fewer surcharges, which for now represent an average of US$ 1 billion per annum.

In this scenario, unemployment in Argentina fell to 5.7% in the third quarter of 2023, or some 800,000 economically active people, according to a report from the National Institute of Statistics and Census (Indec) released Thursday. These new figures meant an interannual improvement from 7.1% and 6.2% in the previous quarter. The unemployment rate in Argentina fell despite the drop in economic activity, which accumulated 1.6 percent at the end of the third quarter. Indec also pointed out that for the population aged 14 and over, the unemployment rate was 6.3% for women and 5.3% for men.