The International Monetary Fund (IMF) published a press release following the approval of its most recent review of Argentina’s agreement that unlocked a US$7.5 billion disbursement, saying that key program targets were missed due to the historic drought and calling to update energy tariffs and contain public wages and pensions. 

The statement comes on the heels of an announcement made last Wednesday by Energy Secretary Flavia Royón, who said that the government will raise energy tariffs for high-income homes due to an update in operational costs following the devaluation that took place after the PASO elections. Royón had already said last week that the raise was coming.

In the statement, Managing Director and Chair Kristalina Georgieva said Argentina’s economic situation has become “increasingly challenging” since the completion of the fourth review, and that “resolving the country’s deep challenges will require continued efforts by future administrations.” 

Georgieve said that achieving the agreed primary fiscal deficit target of 1.9 percent of GDP this year remains “essential to support economic and financial stability.” The Chair added that priority social and infrastructure spending should be protected, and recognized the importance of the completion of the first phase of the gas pipeline.  

The report states that the board approved waivers of non-observance for the key program targets missed through June 2023, an issue it ascribed to the “historic drought and policy slippages.” It also issued waivers associated with the introduction of temporary measures that led to exchange restrictions.

The modifications to the reserve accumulation target were approved alongside a commitment to implement a new policy package to correct “setbacks, safeguard stability, and secure program objectives.” It also informed that an agreement was reached on a new policy package centered on rebuilding reserves and enhancing fiscal order.

“The recent realignment of the exchange rate, coupled with the tightening of monetary policy, should continue to help support reserve accumulation while limiting the exchange rate pass through to inflation. Going forward, the rate of crawl will be carefully calibrated to help achieve reserve accumulation and disinflation goals.”