Buenos Aires: The International Monetary Fund’s executive board on Friday approved a $5.4 billion disbursement to Argentina, a key step forward in the government’s program that’s faced setbacks amid a worsening economic outlook.
The board approved the funds after IMF staff finished the fourth review of Argentina’s $44 billion deal, the institution said in a statement. It brings total disbursements under the extended fund facility to $28.9 billion.
Argentina’s 22nd IMF program in history - the most of any member country - stumbled out of the gate a year ago with lawmakers in the government’s own coalition voting against the agreement. The program has since faced heightened uncertainty before a looming recession and October’s presidential election, with annual inflation in Argentina surpassing 100 per cent last month.
The IMF earlier this month called on Argentina to make stronger efforts to address foreign reserve losses, galloping inflation and other “policy setbacks” amid a severe drought that’s hitting the country’s crucial commodities sector.
Argentina requested to a change to a key target in the program, known as net reserve accumulation. Net reserves, or the stockpile of cash at the central bank, is seen as crucial to preventing a major currency devaluation.
Earlier in March, the government expected to reduce the 2023 reserve target in the IMF deal by about $2 billion, according to two senior government officials who requested not to be named to discuss unpublished figures. That would bring the annual reserve target down to roughly $2.8 billion from the current $4.8 billion stipulated in the last IMF review.
Argentine President Alberto Fernandez visited US President Joe Biden at the White House this week and said afterwards that his American counterpart committed to supporting Argentina at the IMF and other multilateral institutions.