The International Monetary Fund (IMF) on Wednesday agreed to disburse another tranche of loans to Argentina, following the completion of its seventh review.
The IMF Executive Board’s decision enables an immediate disbursement of around $4.7 billion to support the Argentine government’s policy efforts “and strong commitments to restore macroeconomic stability and help Argentina meet its balance of payments needs,” the IMF said in a Wednesday statement.
The board assessed that key program targets through to the end of December 2023 had been missed by large margins, due to policy setbacks. That meant the board had to approve waivers of nonobservance and modify reform program targets.
But IMF Managing Director Kristalina Georgieva praised the initial actions and ambitious plans of the new Argentinian government of President Javier Milei to bring the program back on track and restore macroeconomic stability, while at the same time protecting the country’s most vulnerable.
Georgieva said that after completion of the previous reviews, “Argentina’s already large imbalances and distortions grew more acute, and the program went significantly off track, reflecting the inconsistent policies of the previous government.”
The IMF boss conceded Milei’s government had received a “difficult inheritance” including high and rising inflation, depleted reserves and high poverty levels. She also acknowledged that the path to stabilization would be challenging.
In August last year, the IMF completed its sixth review and released a loan tranche of $7.5 billion for Argentina, in a deal that took four months to negotiate.
Due to an extreme drought and political mistakes, Argentina had failed to make the agreed budget adjustments to qualify for the loan tranche.
In its latest review, the IMF board also approved an extension of the arrangement through December 31, 2024, along with some rephasing of planned disbursements.
“Agile policymaking and contingency planning will be essential,” Georgieva said, adding that further measures may be needed to attain the program objectives and restore durable stability.
Total disbursements under the arrangement amount to about $40.6 billion.