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IMF likely to release US$10.9B more to Argentina following review mission

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IMF likely to release US$10.9B more to Argentina following review mission

The International Monetary Fund should release another $10.87 billion to Argentina under an existing financial stand-by arrangement in the wake of the multilateral agency's latest assessment in the country.

In a March 18 statement, the IMF said that it completed its third mission to review its arrangement with Argentina, and expects its executive board to allow the additional funds to move forward after it examines the review put forward by a team led by Roberto Cardarelli.

The IMF said that it supported the recent measures announced by the central bank to toughen monetary policy, but noted that inflation will remain a challenge, and that "persistence and consistency" will be required to break the cycle.

"We commend the authorities' policy efforts and strong determination to address macro-economic imbalances and advance their economic stabilization plan," Cardarelli said in a statement. However, he stressed that in order to achieve a primary deficit of zero for 2019, greater restriction of public spending will be needed. Fiscal and external deficits were at the heart of the 2018 financial crisis in Argentina, according to the statement.

The IMF's technical team supported the plan to carry out daily auctions of $60 million per day starting in mid-April, in order for the federal government to meet some $9.6 billion in fiscal spending needs.

In terms of economic activity, which dropped 2.6% in 2018 according to official provisional data, the IMF noted that "economic activity has been weak but there are good prospects for a gradual recovery."

Due to weak economic activity and high inflation, the lending agency vouched for an increase in spending on social assistance from 0.2% to 0.3% of GDP.