Updated May 13

Economy Minister Luis Caputo and his team returned from the United States with the International Monetary Fund’s (IMF) approval of the eighth review of the agreement between Argentina and the Fund. 

The IMF’s economic personnel concluded that the program goals had been surpassed and will now submit the staff-level agreement to the Board of Directors. They are expected to approve the US$792 million disbursement scheduled for June.

“Building on the better-than-expected performance in the first quarter — all performance criteria were met with margins — IMF staff and the Argentine authorities reached understandings on policies to continue to entrench the disinflation process, rebuild external buffers, support the recovery, and keep the program on track,” said the Fund’s Western Hemisphere Deputy Director Luis Cubeddu and Argentina mission chief, Ashvin Ahuja in a statement Monday. 

They thanked Economy Minister Luis Caputo and Central Bank President Santiago Bausili for their “ongoing constructive engagement” and “strong ownership and commitment to restoring economic stability and setting the basis for a more sustainable and vigorous private sector-led economy.”

The Argentine delegation, which also included Finance Secretary Pablo Quirno and Central Bank Vice President Vladimir Werning, discussed the agreed-upon roadmap with IMF teams during the review. 

One item that stood out was that the reduction of the fiscal deficit and the accumulation of Central Bank reserves in the first quarter were well above target.

The eighth review of the IMF’s extended facilities program determined that the primary surplus was four times higher than expected. Also, the Central Bank’s reserves grew by over US$2 billion more than stipulated, and monetary issuance was within the set limits.

According to official sources who spoke to Herald sister publication Ámbito, the Fund’s technical team is expected to raise the staff-level agreement with the Board of Directors in order for them to “approve the disbursement of the funds,” estimated at almost US$800 million for June.

The government paid the Fund approximately US$800 million on May 6, which led to a US$687 million drop in Central Bank reserves. This came in addition to another US$1.9 billion payment the previous week.

The expectation of obtaining fresh funds to lift exchange restrictions is present in all President Javier Milei’s statements. However, it will be necessary to see if over-complying with the IMF’s goals is enough for the lender to recommit to debt with Argentina.  

Originally published in Ámbito