The International Monetary Fund (IMF) Executive Board recently reviewed the Ex-Post Evaluation (EPE) of Argentina's exceptional access under the 2022 Extended Fund Facility (EFF), which concluded at the end of 2024. This evaluation assesses whether the macroeconomic strategy, program design, and financing under the EFF were appropriate and aligned with IMF policies.
The 2022 EFF was initiated during challenging circumstances for Argentina, which struggled with high inflation, a budget deficit, low international reserves, and significant public debt. The country faced substantial repurchase obligations to the IMF totaling approximately US$35 billion in 2022-23. Failure to meet these obligations could have led to severe consequences for Argentina and affected the IMF's reputation.
The EPE report concluded that due to the difficult context and other challenges, the design of the 2022 EFF did not adequately address Argentina's fiscal and balance of payments issues. A gradual reform strategy amidst limited financial market access and adverse shocks resulted in outcomes falling short of expectations by 2023.
However, significant changes by the Milei government helped stabilize Argentina's economy. These included fiscal consolidation, currency devaluation, and ending monetary financing of the budget.
Despite not achieving its original objectives, the 2022 EFF helped ease Argentina’s financial burden by rescheduling repayments over 2026-34. The experience highlighted lessons for future IMF programs involving high exposure cases and entrenched balance of payments problems.
Executive Directors welcomed this comprehensive evaluation but regretted that the program did not meet its goals. They acknowledged that while rescheduling repayments likely prevented worse outcomes, program design lacked sufficient adjustment measures. Directors noted improvements since December 2023 towards macroeconomic stabilization.
Concerns were raised about reliance on technical assessments rather than a holistic view regarding fund resources' safeguarding. While evolving enterprise risk management policies were noted, earlier assessments could have led to broader discussions on mitigation options.
Directors emphasized lessons from previous evaluations regarding program robustness against shocks and ownership quality balance. They suggested that current lending frameworks might not suit large exposure cases effectively but had reservations about alternative policy options like obligation postponement.
Further reflection is needed on several areas including capacity-to-repay assessments’ role in lending decisions; providing technical assistance for debt restructuring; approving reviews based on temporary FX controls; clearer contingency plans amid implementation risks; dealing with political pressure; and external communications effectiveness.
These findings are expected to inform ongoing discussions about a potential follow-up program with Argentina.