Argentina’s government has successfully reactivated its financial agreement with the International Monetary Fund (IMF).
This move restarts the Extended Fund Facility (EFF) program, first established in March 2022.
The decision came after both parties acknowledged failures in meeting previously set quantitative targets.
Economy Minister Luis Caputo and Santiago Bausili, head of Argentina’s Central Bank, announced this development.
Their announcement was broadcast from Casa Rosada, the government’s official headquarters.
Caputo noted that the IMF’s Executive Board needs to approve this agreement by the end of January.
Once approved, it will enable Argentina to receive a new funding installment of approximately 4.7 billion dollars.
The EFF program’s aim is to assist Argentina in managing a significant debt of 44.5 billion dollars.
This debt emerged in mid-2018 amid major capital outflows and currency fluctuations.
The program’s renewal, with updated targets, aims to recover the lost credibility over the past two quarters.
The funds will primarily address capital payments due in recent and upcoming months.
Caputo clarified that this is not a brand-new agreement but a continuation of the previous one.
He emphasized the IMF’s openness to considering new financial arrangements in the future.
Bausili outlined the revised program’s objectives, focusing on rebuilding the Central Bank’s balance sheet and boosting reserves.
Key goals include maintaining fiscal discipline to stabilize the economy and reduce inflation.
Rebuilding the Central Bank’s balance sheet
The IMF emphasized achieving a fiscal surplus of 2% of the GDP in its statement. This balance will be attained through a mix of increased revenues and controlled spending.
The program also strengthens social assistance, maintains key subsidy programs, and supports child allowances.
The revised monetary policy involves ending Central Bank loans to the government.
It also focuses on reducing the excess of pesos and strengthening the Central Bank’s balance.
Structural policies aim to overcome growth and export barriers, utilizing Argentina’s energy and mining potential.
This includes enhancing competition and streamlining bureaucratic processes.
The announcement followed a visit by an IMF mission led by Luis Cubeddu and Ashvin Ahuja, highlighting Argentina’s commitment to economic stability and growth.