Argentina, IMF close to agree on delayed programme review in January
IMF mission will arrive in Argentina on Jan 4
Agreement on 7th review could unlock $3.3 bln in IMF funds
Country has to pay $2.8 bln to IMF in January and February
Adds more quotes, background, detail from paragraph 7 onwards
By Jorgelina do Rosario
LONDON, Jan 2 (Reuters) –Argentina and the International Monetary Fund are close to an agreement on a delayed review of its $44 billion programme, three sources told Reuters, a key step that would put the country on track to unlock the next tranche of funding.
Government officials and IMF staff representatives are in talks over the seventh review of the 2022 loan, which was originally scheduled to be completed in November but delayed amid a change of government, as President Javier Milei took office on Dec. 10, the sources familiar with the matter said.
“An agreement is close, the country is working to get an approval this month,” one of the sources said, who asked not to be named because the talks are private.
A spokesperson for Milei declined to comment. An IMF spokesperson did not immediately reply to a request for comment.
The seventh review, which revises the programme’s performance criteria until September, is key to put the deal back on course, as it had gone off track shortly after its latest formal assessment in August due to missed targets.
An IMF mission will arrive in Buenos Aires on Jan. 4, the president’s spokesperson said on Tuesday, without adding further details.
If approved by both the IMF staff and the Fund’s executive board, the review will also unlock disbursements for around $3.3 billion.
FROM PRIOR ACTIONS TO WAIVER
Argentina’s Milei administration has already initiated a formal request for a waiver for the programme after the previous administration failed to meet the goals agreed in August.
“The key is that the country’s recent prior actions could allow a waiver on the programme,” a second source said. The IMF usually approve waivers to missed quantitative performance criteria if it believes that a programme “will still succeed,” according to the Fund’s guidelines.
The IMF recently hardened its view on Argentina after the country missed fiscal and reserves accumulation targets.
The prior actions are steps that a country takes before completing a review. Milei’s administration has laid out a package of economic measures to tackle a deep fiscal deficit, triple-digit inflation and a dearth of foreign reserves.
Argentina devalued the Argentine peso by 54%, weakening the official exchange rate from 366 to 800 pesos per dollar in December, narrowing the gap with the black-market peso to a level last seen in 2019, when capital controls were imposed.
Milei’s government also said it is working on reducing energy and social subsidies to restore fiscal balance in 2024. The IMF called the economic measures “bold”, adding “their decisive implementation will help stabilize the economy.”
Milei has also sent a reform bill to Congress proposing far-reaching changes to the country’s tax system, electoral law and public debt management.
Argentina has to pay $2.8 billion on IMF maturities in January and February. The latest loan payment to the IMF was secured via a $960 million short-term financing bridge from the Development Bank of Latin America and the Caribbean (CAF), as the country’s net reserves are in the red.
Wall Street bank Morgan Stanley said it expects a fully revamped IMF programme for the country for the second half of the year, according to a note to clients published on Tuesday.
Reporting by Jorgelina do Rosario; additional reporting by Marc Jones; editing by Karin Strohecker and Jonathan Oatis
