The Ministry of Economy and the Central Bank of Argentina, together with the International Monetary Fund (IMF) team, have finalized the fundamental aspects of the technical work for the next revision of the credit program. Both parties announced on their Twitter accounts that they have agreed on the central objectives and parameters that will serve as the basis for reaching a “Staff Level Agreement,” which is expected to be finalized in the coming days and that will lead to the review of the Argentina program.
The agreement seeks to consolidate the fiscal order and strengthen reserves, taking into account the negative impact of the historical drought, the damage to exports, and the country’s fiscal revenues. A team from the government of Alberto Fernández traveled to Washington in search of making the goals of the 44,000 million-dollar credit program signed with the IMF in 2022 more flexible and obtaining the expected disbursements.
However, Argentina has faced difficulties in meeting the targets for the accumulation of international reserves and the reduction of the fiscal deficit established for the first and second quarters of this year. Monetary reserves have decreased, and in June they had to face maturities of 2.7 billion dollars with Special Drawing Rights (SDRs) and yuan. By the end of July, they must pay off about $2.5 billion more.
The country is facing a decline in international reserves due to the historic drought, which has caused a significant loss of income, estimated at around 20 billion dollars by the Argentine authorities. Annual inflation exceeds 115%, and poverty is around 40%.
Argentina agreed in 2022 with the IMF on a loan to pay off the 44,000 million dollars previously disbursed in a loan agreed during the government of Mauricio Macri for 57,000 million dollars, the largest loan in the history of the IMF. The schedule set for 2022 includes 10 quarterly reviews, and staff-level agreements must be approved by the IMF Executive Board to release the funds.
While negotiations with the IMF continue, the Fernández government is expected to announce stimulus measures for agricultural exports, which are the country’s main source of foreign currency, as well as tax measures for imports and large companies.