The International Monetary Fund (IMF) has approved a 48-month extended arrangement under the Extended Fund Facility (EFF) for Argentina. The agreement is valued at Special Drawing Rights (SDR) 15.267 billion, equivalent to about US$20 billion, or 479 percent of Argentina's quota, and was announced by the Executive Board in Washington, DC. This decision enables an immediate disbursement of SDR 9.2 billion, or roughly US$12 billion, with a planned review in June 2025 that includes an additional disbursement of around US$2 billion.
This arrangement was requested by the Argentine authorities to assist in the next phase of their stabilization and reform agenda, aimed at medium-term balance of payments support. The program is designed to encourage further financing from multilateral sources, including the World Bank Group and the Inter-American Development Bank (IDB), as well as bilateral sources, helping Argentina return to international capital markets.
The program supported by the IMF aims to reinforce the gains from recent policy measures, focusing on fiscal and monetary adjustments and deregulation while overcoming Argentina's macroeconomic challenges. The ultimate goal is to establish macroeconomic stability, external sustainability, and a framework for robust growth.
The main components of the program involve maintaining a stable fiscal foundation, adopting a flexible monetary and foreign exchange policy, and advancing structural reforms to create a more dynamic economy. Success will depend on consistent policy execution and effective contingency planning, particularly considering global economic uncertainties.
Kristalina Georgieva, the IMF’s Managing Director, commented, "The Argentine authorities’ decisive implementation of their stabilization plan, centered on a strong fiscal anchor and broad structural reforms, has yielded rapid disinflation, a solid economic recovery, and incipient improvements in social indicators. Despite this early progress, Argentina continues to face vulnerabilities and structural challenges, including limited external buffers to address elevated and rising global risks as well as impediments to strong and sustainable growth."
The new phase of Argentina’s stabilization plan, backed by the four-year extended arrangement, aims at macroeconomic stabilization, external viability, and market access renewal. Policy priorities include sustaining the fiscal anchor, transitioning towards a robust monetary and FX policy framework, and deepening economic reforms.
"In building on the authorities’ commitment to a zero-deficit target and track record of delivering the first fiscal surplus in almost two decades, the program focuses on strengthening the quality and durability of the fiscal anchor. This will be supported by ongoing spending discipline, efficiency measures, and well-sequenced reforms of the tax, revenue sharing, and pension systems," Georgieva added.
Additionally, the program outlines steps to establish greater exchange rate flexibility. This involves easing FX restrictions while implementing macroprudential policies to manage currency risk. The structural reforms focus on enhancing Argentina’s growth prospects, especially in energy and mining, by improving market flexibility and state efficiency.
With the global landscape fraught with uncertainties, Argentina has developed contingency plans and a responsive policy framework to meet program objectives. Effective communication and expansive support for the reform agenda remain crucial.