The IMF approves a $5.4 billion disbursement to Argentina, advancing the nation’s struggling economic program.
The International Monetary Fund (IMF) has given its approval for a $5.4 billion disbursement to Argentina, marking a crucial advancement in the nation’s economic program that has faced obstacles due to a deteriorating economic outlook. The IMF executive board’s decision comes after the completion of the fourth review of Argentina’s $44 billion agreement, bringing the total disbursements under the extended fund facility to $28.9 billion.
Argentina’s 22nd IMF program, the most of any member country, faced initial challenges a year ago when lawmakers within the government’s coalition voted against the agreement. The program has since experienced increasing uncertainty due to a looming recession and the upcoming presidential election in October. Argentina’s annual inflation rate exceeded 100% last month.
The IMF has urged Argentina to make more significant efforts to address foreign reserve losses, soaring inflation, and other “policy setbacks” in the face of a severe drought impacting the nation’s vital commodities sector. Argentina requested a change to a key target in the program, known as net reserve accumulation. The central bank’s stockpile of cash, or net reserves, is considered essential in preventing a significant currency devaluation.
In March, the Argentine government anticipated reducing the 2023 reserve target in the IMF agreement by approximately $2 billion, according to two senior government officials who wished to remain anonymous while discussing unpublished figures. This adjustment would decrease the annual reserve target from the current $4.8 billion to roughly $2.8 billion, as specified in the last IMF review.
Argentine President Alberto Fernandez recently met with US President Joe Biden at the White House. Following their meeting, President Fernandez stated that President Biden committed to supporting Argentina at the IMF and other multilateral institutions. This approval marks a key milestone for Argentina as it grapples with economic challenges and seeks to stabilize its financial situation.
