IMF to disburse US$800 million after Argentina’s eighth review approved

The government said it would cut the PAIS tax and consider lifting currency controls

The International Monetary Fund (IMF) board of directors has approved the eighth review of its agreement with Argentina, which will allow for an US$800 million disbursement to the country.

The international lender noted in a brief release Thursday evening that Argentina’s program was “firmly on track,” with all performance criteria met. However, it called on the government to continue to support the vulnerable and improve the “quality of fiscal adjustment.”

The Fund said the disbursement would “support the authorities’ efforts to entrench the disinflation process, rebuild fiscal and external buffers, and underpin the recovery.” 

This disbursement will bring the total made under the agreement to approximately US$41.4 billion.

Argentina’s government said in a statement that the Central Bank would lift the currency controls collectively known as the cepo (Spanish for “clamp”) — but only if doing so would not risk its progress fighting inflation and accumulating reserves.

Argentine authorities stressed that they would not “include commitments for specific dates or measures.” This contradicts the seventh review, which stated that the government had promised to lift the cepo this year, with a roadmap that it would develop in June.

The government’s press release added that, due to its harsh austerity measures, it reached the Fund-mandated financial balance in “record time.” It promised to cut taxes in the second semester, starting with the PAIS tax on U.S. dollar transactions, once the Ley Bases is enacted.

Neither the Fund nor the government’s communiqués mentioned the possibility of a new program between the lender and the country that would allow Argentina to lift the cepo, something Economy Minister Luis Caputo said was in the works.

Economy Minister Luis Caputo and his team traveled to Washington to discuss a staff-level agreement with the fund in May. 

At the time, the Fund’s Western Hemisphere Deputy Director Luis Cubeddu and Argentina mission chief, Ashvin Ahuja, thanked 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.”

Gita Gopinath, the lender’s First Deputy Managing Director, welcomed the review completion and said that all the targets were “met with wide margins,” adding in an X post that “continued efforts needed to build on impressive gains so far.”

According to a press release by Argentina’s Economy Ministry, the government “over-complied” with the goals established in the seventh review of the program, which apply to international reserves, fiscal balance in the public sector, and monetary issue. The communiqué said that, whereas the Fund required it to accumulate US$6 billion in net international reserves as of March 31, the Central Bank gained US$9 billion.


All Right Reserved.  Buenos Aires Herald