Calay News
In 2022, the International Monetary Fund (IMF) and the Argentine government reached a financing agreement through which Argentina would receive 44,000 million dollars over 30 months. However, this loan was conditional on the Argentine president, Alberto Fernández, increasing international reserves and reducing the country’s fiscal deficit, which went from 3% of the Gross Domestic Product (GDP) in 2021 to 2.5% in 2022, 1.9% in 2023, and 0.9% in 2024.
Since March 31, when the fourth review was completed, the Argentine economy has faced significant challenges and was unable to achieve key program objectives until the end of June. This was due to the larger-than-expected impact of the drought as well as deviations and delays in policy implementation, the IMF warned.
The agreement will allow Argentina to access approximately 7.5 billion dollars, but this release of funds is subject to the implementation of the agreed measures and the approval of the IMF board, whose meeting will take place in the second half of August.
After several weeks of negotiations, a policy package was agreed upon that includes a series of sequential measures aimed at strengthening reserves and improving fiscal sustainability while protecting critical infrastructure and social spending.
The economic situation in Argentina is worrisome since it faces year-on-year inflation of more than 110% and a poverty rate of 40%, according to data from the National Institute of Statistics and Censuses (Indec). In addition, the government of Alberto Fernández estimates that global losses due to the drought will reach some 20,000 million dollars this year, which represents almost 3% of the country’s GDP.
