MercoPress. South Atlantic News Agency

Argentina and IMF reach technical agreement

“It should be noted that Argentina managed to return to international capital markets ahead of schedule,” the IMF said

The Argentine Government of President Javier Milei and the International Monetary Fund (IMF) announced Thursday that they have reached a technical agreement on the first review of the country's Extended Fund Facility (EFF) program. Once approved by the IMF Executive Board, this deal will enable a disbursement of approximately US$2 billion to the South American country.

 The IMF stated that the program has had a “solid start,” citing the implementation of sound macroeconomic policies, including a strong fiscal anchor and tight monetary stance. The transition to a more flexible exchange rate regime and the removal of most exchange controls have also “proceeded in an orderly manner.”

The IMF highlighted Argentina's inflationary deceleration, economic expansion, and poverty reduction, and notably, the country's early return to international capital markets.

“In line with the program's objectives, understandings were reached on policies aimed at safeguarding compliance with the fiscal anchor, rebuilding reserves, reducing inflation in a lasting manner, and continuing to improve the clarity and functioning of the monetary framework,” the IMF also said.

Despite this positive assessment, the IMF's official statement did not explicitly address Argentina's failure to meet its reserve accumulation target for June 15, which saw a reported gap of approximately US$4.3 billion.

However, it acknowledged a “more challenging external environment” and a recent shift in the official stance that led to the Treasury acquiring almost US$1 billion in reserves.”

The agreement includes understandings on policies aimed at safeguarding the fiscal anchor, rebuilding reserves, sustainably reducing inflation, and improving the monetary framework.

The IMF Executive Board is expected to give its final approval and authorize the disbursement by the end of July. Argentina faces a US$800 million interest payment to the IMF on August 1.

The EFF program, signed in April, initially provided Argentina with US$20 billion in financing, with an immediate disbursement of US$12 billion.