Argentina reaches deal to combine IMF reviews

Published July 29, 2023
The International Monetary Fund headquarters in Washington, DC, on April 13, — AFP
The International Monetary Fund headquarters in Washington, DC, on April 13, — AFP

LONDON: Argentina’s preliminary deal with the International Monetary Fund is set to combine reviews of its $44 billion loan programme, according to four sources, potentially paving the way for streamlining payments to the cash-strapped country.

Latin America’s third-biggest economy has been seeking to bring forward some of the IMF disbursements scheduled for this year, as the country battles a severe financial crisis that could worsen further due to a lack of international reserves.

Argentine government officials have been trying to reach a so-called Staff Level Agreement (SLA) with the IMF that would cover the country’s progress concerning the fund’s fifth and sixth reviews of a 2022 loan, the sources added, asking not to be named because the talks are private. Each review covers three months.

Combining the two reviews would give Argentina access to 5.5 billion of IMF’s special-drawing rights (SDRs), equivalent to about $7.3bn. But it is not clear if merging the reviews would automatically lead to a combined payment, what the IMF calls a rephasing of disbursements.

The move comes after fifth review talks were delayed amid discussions over some economic measures needed to maintain IMF disbursements. These included the introduction of more peso exchange rates to safeguard reserves.

A spokesperson for the economy minister didn’t immediately reply to a request for comment.

An IMF spokesperson said: “Discussions between the teams continue to be very constructive” and “are aimed at reaching SLA.” Once an SLA is reached, this is presented to the IMF executive board and if it is signed off, this will trigger the release of cash.

Argentina’s fifth review — linked to a $4bn payment — was set to be completed in June but negotiations on an agreement were delayed due to IMF “prior action” demands.

Published in Dawn, July 29th, 2023

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