The information indicates that the IMF staff and the Argentine authorities have reached an agreement at the staff level on the first review under Argentina’s 30-month agreement. Once the review is complete, Argentina will have access to some US$ 4,030 million.
The statement realizes that “all the quantitative goals of the program for the first quarter of 2022 were met” and adds that “Progress is also being made on growth-enhancing reforms in line with program commitments.”
IMF staff and Argentine authorities agreed that the annual targets established in the approval of the agreement will remain unchanged.
However, the statement states that “taking into account the initial impact of external shocks and seasonal spending and import patterns, it is proposed to modify the interannual quarterly goals of the primary fiscal deficit and the accumulation of reserves, keeping the annual objectives of the program unchanged”.It is noted that “This is critical to strengthening stability and supporting the ongoing economic recovery.”
Likewise, the Fund maintained that “we express our satisfaction with the commitment of the authorities to implement additional policy measures to achieve these annual objectives.”
Disbursement
An IMF team, led by julie kozackdeputy director of the Western Hemisphere Department, and Luis Cubedduhead of mission for Argentina, held face-to-face and virtual meetings with the Argentine authorities to discuss policies to complete the first review of the extended agreement within the framework of the Extended Fund Service (SAF).
Kozack issued the following statement in Washington today at the conclusion of these meetings: “IMF staff and Argentine authorities have reached staff-level agreement on an updated macroeconomic framework and associated policies necessary to complete the first review under Argentina’s 30-month SAF agreement.
It clarifies that “The agreement is subject to the approval of the Executive Board of the IMF, which it is expected to consider it in the coming weeks. Once the review is complete, Argentina will have access to some US$4.03 billion (equivalent to SDR 3 billion).”
“The review focused on evaluating the performance of the program since the approval of the agreement, analyzing the effects of the impact of the war in Ukraine on the Argentine economy and identifying policies to address the associated effects”, specifies the official information from the Fund.
Basically, the IMF staff and the Argentine authorities agreed that the annual objectives established in the approval of the agreement will remain unchanged, specifically those related to the primary fiscal deficit, monetary financing and net international reserves. It is considered that “Such an approach provides a vital anchor for economic stability and growth in times of uncertainty.”
“All quantitative goals were met in the first quarter of 2022. Progress is also being made on the structural agenda and growth-enhancing reforms in line with program commitments, including on the energy front” sustain communication.
“The external shock associated with the war in Ukraine is expected to have a limited impact on Argentina’s growth and balance of payments this year, but – as in most other countries – rising global commodity prices has already caused higher inflation” the technicians of the Fund warn.
It is clarified that “Despite the recent increases in energy tariffs, Argentina’s fiscal position is also being affected by the shock of commodity prices due to an increase in energy subsidies and an adequate expansion of social support directed to the poor. low-income households”.
The statement points out that “the Argentine authorities are committed to implementing policies to achieve the annual objectives of the primary fiscal deficit program, monetary financing and accumulation of reserves.”
In this regard, it recalls that, in terms of fiscal policy, the authorities plan to reorient public spending to achieve the primary fiscal deficit target of 2.5 percent of GDP by 2022, and at the same time reduce monetary financing to 1 percent. percent of GDP, as planned in the approval of the agreement.
It maintains that “they have also reaffirmed their commitment to continue applying the monetary and exchange rate policy framework to achieve positive real policy interest rates, ensure the competitiveness of the exchange rate and support the accumulation of reserves of US$5.8 billion for the entire year. .”
Policies
The fund puts Emphasis on the need to continue applying the agreed policies. From this point of view, the statement states that “Looking forward, decisive policy implementation will be critical to ensure that the program’s goals are met throughout the remainder of 2022 and beyond.” This also includes taking measures to mobilize net domestic financing in pesos, improve the transmission of monetary policy, reduce tax evasion, strengthen the AML/CFT framework, and encourage investment in strategic sectors.”
In the final paragraph of the statement “The IMF staff thanks the Argentine authorities for the open and constructive discussions and welcomes their firm commitment to implement the programwhich aims to help Argentina strengthen economic stability, address persistently high inflation, and continue to address its historic challenges.”
Source: Ambito
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