IMF approves agreement to extend Argentina’s loan program

The Executive Board of the International Monetary Fund (IMF) has approved a 30-month extension of Argentina’s $44 billion Extended Fund Facility, Report informs referring to the press service of the IMF.

“The Executive Board of the International Monetary Fund (IMF) approved today [on March 25] a 30-month extended arrangement under the Extended Fund Facility (EFF) for Argentina amounting to …$44 billion… The Executive Board’s decision allows the authorities [of Argentina] an immediate disbursement of…$9.656 billion. The EFF arrangement aims to provide Argentina with balance of payments and budget support that is backed by measures designed to strengthen debt sustainability, tackle high inflation, boost reserves, address the country’s social and infrastructure gaps and promote inclusive growth,” reads the report.

The IMF and the Argentine authorities have also agreed to move the first review of the program to mid-May from mid-June.

“Risks to the program are exceptionally high and spillovers from the war in Ukraine are already materializing. In this context, early program recalibration, including the identification and adoption of appropriate measures, as needed, will be critical to achieve the program’s objectives,” said Kristalina Georgieva, Managing Director and Chair.

Directors agreed that the program is subject to exceptionally high risks. They recognized Argentina’s vulnerability to external shocks and implementation difficulties given the complex social and political situation.

Noting that the spillovers from the war in Ukraine are materializing, Directors welcomed the authorities’ agreement to bring forward the first review of the program and urged them to recalibrate policies, as needed, to secure the fiscal objectives and contain second-round inflationary effects from rising commodity prices.

Directors noted that the elevated exposure to Argentina over an extended period creates major financial and reputational risks for the Fund. As these risks cannot be fully mitigated through program design and contingency planning, Directors agreed that finely balanced judgements will be needed when assessing difficult tradeoffs that are likely to arise during the life of the program.