Yesterday, the Executive Board of the International Monetary Fund (IMF) completed the third review of Argentina’s 30-month deal signed in March. The approval means that the IMF immediately allowed a disbursement of about US$6 billion, which brings the total so far to about US$ 23.5 billion. Some US$ 10.5 billion remains to be paid to Argentina, which will use all of that money to repay the agency.

In its press release, the agency praised Ministry Sergio Massa’s austerity policies. “Tighter macroeconomic policies since July are starting to bear fruit—inflation is moderating, the trade balance is improving, and reserve coverage is gradually strengthening,” wrote the Executive Board. “All quantitative performance criteria through end-September 2022 were met, on the back of prudent macroeconomic management by the new economic team,” they added.

However, the IMF also approved waivers of non-observance for foreign exchange controls and multiple exchange rates, but “called for their unwinding as conditions permit”.

After finishing the review, Gita Gopinath, First Deputy Managing Director and Acting Chair said: “Macroeconomic imbalances persist, and conditions remain fragile. Continued enhanced program implementation will therefore be critical to achieve key program objectives and maintain the program as an anchor for stability.”

Gopinath also marked the importance of “fiscal consolidation” and the program’s demand for the reduction of “the primary fiscal deficit to 1.9 percent of GDP in 2023”. She also praised the “sustained positive real interest rates”, which she considered “essential to reduce persistent high inflation and strengthen the demand for peso assets”.

“A proactive market-oriented debt management strategy is vital to mobilize domestic financing, mitigate rollover risks, and reduce central bank financing of the deficit”, she said, before welcoming the restructuring agreement with Paris Club. “Continued efforts on the structural front remain key to support broader macroeconomic goals, including by strengthening public financial management, the peso government debt market, AML/CFT framework, the central bank balance sheet, and the efficiency and sustainability of the energy sector,” she added.

“Broad political support for program policies remains critical in the period ahead”, she concluded, perhaps thinking more about the kirchnerista wing of the government than about the conservative and right-wing opposition.

The current renegotiation was reached between the agency and the national government after the previous deal, taken on by the then president, Mauricio Macri -the largest loan in the history of the IMF- indebted the country to the tune of  US$ 44 billion.