IMF staff, Argentina agree loan review to help unlock $800 million

ARGENTINA-IMF/ (UPDATE 2, PIX):UPDATE 2-IMF staff, Argentina agree loan review to help unlock $800 million

Reuters
First Published13 May 2024
IMF staff, Argentina agree loan review to help unlock $800 million
IMF staff, Argentina agree loan review to help unlock $800 million

(Adds that approval could unlock nearly $800 million disbursement)

May 13 (Reuters) - Staff of the International Monetary Fund (IMF) and Argentine authorities have reached an agreement on the eighth review of the country's $44 billion extended fund facility arrangement, as reforms under President Javier Milei have improved macroeconomic stability, the IMF said on Monday.

The IMF said the decision, which will unlock a disbursement of close to $800 million if it gets the final sign-off from the fund's board of directors, followed better-than-expected first-quarter performance in Argentina.

Milei took office in December vowing to tackle triple-digit inflation, contracting economic activity and reserves in the red. He rolled out a sweeping fiscal reform, tightening government spending sharply.

The changes have helped Argentina rebuild depleted foreign currency reserves, post fiscal surpluses at the start of the year and stabilize the peso currency. Markets have rallied and inflation is coming down on a monthly basis since a December peak.

The economy, however, is stalling, with falling consumption and manufacturing, a challenge to Milei. Poverty is also rising.

Milei's plan "has resulted in faster-than-anticipated progress in restoring macroeconomic stability and bringing the program firmly back on track," the IMF said. It cited also important work to protect vulnerable groups given "the backdrop of a contraction in economic activity."

Authorities agreed that Argentina would continue to work to reach a fiscal balance without net central bank financing, the IMF said. Meanwhile, foreign-exchange policy will become more flexible as conditions allow, it added.

The terms must now be approved by the IMF executive board, which is expected to discuss the subject in coming weeks. (Reporting by Kylie Madry; Editing by Sarah Morland and Leslie Adler)

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