BUENOS AIRES (Reuters) – The International Monetary Fund (IMF) has reached a staff-level agreement on arranging Argentina’s $44 billion Expanded Fund Facility, which is supposed to unlock nearly $4 billion in funds for the country, the International Monetary Fund said on Monday.
The approval, which needs to be approved by the International Monetary Fund’s executive board, would unlock $3.9 billion for the embattled South American country, which is looking to rebuild reserves and stave off spiraling inflation.
Argentina, a major producer of cereals, struck a new deal with the International Monetary Fund earlier this year to replace a massive failed program from 2018. The new program was crucial to meeting the country’s commitments to the IMF that it would otherwise not have been able to pay.
That deal came with economic goals, including rebuilding depleted international reserves and reducing deep primary fiscal deficits to improve the country’s financial conditions.
“Most of the revised quantitative program targets until the end of June 2022 have been met, except for the minimum net international reserves, mainly due to higher-than-scheduled import volume growth,” the IMF said in a statement.
“A subsequent period of volatility in the currency and bond markets was halted after decisive policy steps to correct past setbacks and rebuild credibility.”
The International Monetary Fund has praised the steps taken by Argentina’s Economy Minister Sergio Massa, who took office in August after a turbulent period that saw long-term minister Martin Guzman resign and his replacement Silvina Patakis resigned for only a few weeks.
Regarding Argentina’s reserves, which have proven difficult to rebuild, the IMF said they still have to rise by about $9.8 billion in 2022-23, in line with the program’s goals. However, the global economic environment has affected growth and fueled inflation.
“Nevertheless, against the backdrop of the new economic team’s assertive actions, market pressures are dissipating, and growth forecasts remain unchanged at 4% for the year, before tapering back to the potential rate of 2% in 2023 and beyond.” The International Monetary Fund has been added.