IMF staff backs $4bn tranche for Argentina, hails ‘decisive’ steps

Protesters sit near the National Congress as the Senate debates the government’s deal with the International Monetary Fund (IMF), in Buenos Aires, Argentina March 17, 2022. REUTERS/Agustin Marcarian

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BUENOS AIRES, Sept 19 (Reuters) – The International Monetary Fund (IMF) has reached a staff-level agreement on Argentina’s $44 billion extended financing facility arrangement, which is expected to release nearly $4 billion of funds for the country, the lender announced on Monday.

The approval, which must be ratified by the IMF’s board, would unlock $3.9 billion for the struggling South American nation, which is seeking to rebuild its reserves and curb runaway inflation.

Argentina, a major grain producer, reached a new agreement with the IMF earlier this year to replace a huge failed program from 2018. The new program was essential to be able to meet the country’s obligations to the IMF that it was otherwise unable to pay.

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This agreement was accompanied by economic objectives, including the replenishment of depleted international reserves and the reduction of a deep primary budget deficit to improve the country’s finances.

“Most of the revised quantitative targets of the program until end-June 2022 have been met, except for the floor on net international reserves, mainly due to higher than expected import volume growth,” the report said. IMF in a statement.

“A subsequent period of currency and bond market volatility was halted following decisive policy action to correct earlier setbacks and rebuild credibility.”

The IMF has welcomed the steps taken by Argentine Economy Minister Sergio Massa, who took office in August after a volatile period that saw longtime minister Martin Guzman resign and his replacement Silvina Batakis lasting only a few weeks. .

Regarding Argentina’s reserves, which have proven difficult to rebuild, the IMF said they are expected to increase further by some $9.8 billion over the period 2022-23, in line with program targets. However, the global economic environment weighed on growth and fueled inflation.

“Despite this, against the backdrop of resolute actions by the new economic team, market pressures are dissipating and growth prospects remain unchanged at 4% for this year, before moderating to a potential rate of 2% in 2023 and beyond,” said the IMF Add.

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Reporting by Adam Jourdan; Editing by Paul Simao

Our standards: The Thomson Reuters Trust Principles.

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