The International Monetary Fund (IMF) has granted Argentina a two-month extension for the final review of its $44 billion loan, offering the government additional time to implement reforms.
Reuters cited three sources with knowledge who revealed that the government and IMF officials mutually agreed to defer the last review, initially slated for September, to November.
The extension aims to “ensure that the program delivers on its objectives,” with the source emphasising that it does not imply any fresh financing.
This marks the first alteration to the schedule for a loan agreed upon in 2022.
The agreement between Argentina and the IMF comes amid efforts to address the challenges posed by the country’s economic situation.
President Javier Milei, who assumed office on December 10, faced delays in the seventh review of the existing program due to the change in leadership.
The IMF’s executive board is anticipated to approve the extension and disburse $4.7 billion in funding during a meeting scheduled for Wednesday.
While an IMF spokesperson did not respond immediately to requests for comment, a spokesperson for Argentina’s economy ministry confirmed expectations of an IMF board meeting on January 31 to discuss the program.
The extension of the loan review provides Argentina with additional flexibility in deciding the way forward.
“The country could always negotiate a new program before the current loan ends, but now it has more breathing room until the end of the year to decide what it wants to do,” Reuters quoted one source as saying.
The extension does not alter the overall quantity of reviews, and the remaining three reviews from May onwards are poised to trigger disbursements totalling approximately $1.9 billion.
The latest staff report is expected to highlight that the current program went “significantly off track,” with missed goals such as international reserves accumulation and a reduction in the primary fiscal deficit.
Argentina’s economic challenges, particularly in meeting program goals, have been acknowledged by the new administration.
President Milei’s ambitious agenda aims to achieve fiscal balance and accumulate $10 billion in net international reserves by the end of 2024.
The IMF expects the country to address issues such as public hearings for energy prices, buyback of government debt held by the central bank, and resolution of external commercial debt.
Economy Minister Luis Caputo recently withdrew major spending reforms from a comprehensive bill in Congress to facilitate approval, citing insufficient support for measures like tax reforms.
The IMF has stressed the need for Argentina to navigate these challenges and meet the specified program goals.
(With inputs from Reuters)
