IMF: All you want to know about Argentina

Argentina, Buenos Aires. (IMF photo).

This article is brought to you in association with the International Monetary Fund

Written by IMF staff

Frequently asked questions about Argentina, June 7, 2018

How much money will be disbursed to Argentina to support the new economic plan?

Argentina and IMF staff have reached an agreement on an economic plan that can be supported by IMF financing in the form of a Stand-By Arrangement for about US$50 billion. The agreement is pending IMF Executive Board approval. If approved, Argentina would be eligible to access the initial installment of the loan.

How did Argentina and the IMF arrive at the loan amount?

The Argentine government requested IMF financial support in late May to help strengthen their economy in light of the recent financial market turbulence. Following that request, an IMF team held discussions with the government to assess the economic and financial situation and the size of the country’s overall financing needs. They also agreed on the appropriate policy response. While the total amount of money available to Argentina is $50 billion, the government has indicated that it will draw on the first installment of that amount but intends to subsequently treat the loan as precautionary. The loan can be thought of as a credit line that Argentina can tap as needed during a three-year period.

What is the purpose of the loan?

The money will be used to support the government’s economic priorities, which include strengthening the Argentine economy and protecting the living standards of the Argentine people.

What are the priorities in the plan agreed between IMF staff and the Argentine authorities?

At the core of the government’s economic plan is a rebalancing of the fiscal position. The Argentine authorities intend to accelerate the pace at which they reduce the federal government’s deficit. This measure will ultimately lessen the government’s financing needs and put public debt on a downward path.

The plan also aims to lower inflation, which eats into the foundation of Argentina’s economic prosperity and is borne directly by society’s most vulnerable.

In addition, the plan will put in place measures to offer opportunity and support to the less well-off members of Argentine society. The authorities have committed to ensuring that spending on social assistance, as a share of GDP, will not decline during the next three years.

What is an IMF Stand-By Arrangement?

The Stand-By Arrangement (SBA) is a financing tool of the IMF available to any member country that needs financing to overcome balance of payments problems. The SBA allows the IMF to respond quickly to a country’s external financing needs and supports policies designed to restore sustainable growth. All member countries facing external financing needs are eligible for SBAs, but this option has been more often used by middle-income or high-income countries, since low-income countries have access to a range of concessional instruments.

How long does a negotiation for an SBA last, and what does it entail?

The negotiation process usually takes weeks. A country must first request financial support from the IMF. Following such a request, an IMF staff team holds discussions with the government to assess the economic and financial situation and the size of the country’s overall financing needs, and agree on the appropriate policy response. The member country has primary responsibility for driving the design of the policies that will make the IMF-supported program successful and for implementing them. Typically, a country’s government and the IMF must reach understandings on a program of economic policies before the IMF lends money to the country.

What is the typical duration of an SBA?

The length of an SBA is flexible, and typically covers a period of 12–24 months, but no more than 36 months, consistent with addressing short-term balance of payments problems. Repayment of resources received under the SBA is due within 3¼-5 years of disbursement, which means each disbursement is repaid in eight equal quarterly installments beginning 3¼ years after the date of each disbursement.

How much can the IMF lend to a country under the SBA?

The access limit for nonconcessional lending is 435 percent of a country’s quota, or calculated share in the IMF, net of repayments, over the life of the program and 145 percent of quota on an annual basis. Under the IMF’s “exceptional access policy,” the Fund can lend above these normal limits on a case-by-case basis, subject to study and approval by the Fund’s Executive Board—a 24-person panel that represents the interests of all member countries whose contributions to the IMF are used to finance members in need.

How flexible are IMF lending arrangements?

After understandings are reached on an economic program, the IMF monitors a country’s progress toward achieving its goals. Regular reviews by the IMF’s Executive Board play a critical role in assessing performance under the program and allowing the program to adapt to economic developments. The SBA framework allows for some flexibility in the frequency of reviews based on the strength of the country’s policies and the nature of its financing needs. In addition, we would take into account any unforeseen circumstances that arise over the course of a program—for example, if a country is hit by a shock, such as a natural disaster.

How does the IMF include the views of the society in its policy negotiations?

The IMF maintains an open dialogue with a wide range of citizens in its member countries. We engage regularly with not only the government but also labor unions, academics, students, private sector analysts, think tanks, faith-based associations, and local community groups. This broad engagement can highlight important issues, offer information to supplement official data, and provide insights that may differ from perspectives in official circles.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

These are the cities where people work the longest hours

Should tech companies pay us for our data?

Technology is delivering better access to financial services. Here’s how

Humanitarian Aid 2016: The needs, the highlights, the crisis and the relief

Greece’s last Eurogroup or the beginning of a new solid European Union?

Is blockchain overhyped? 5 challenges to getting projects off the ground

Why the next 4 months are crucial to the future of the ocean

We have to learn to trust Artificial Intelligence. Here’s how

UN experts voice ‘deep concern’ over Iran’s ‘consistent pattern’ of denying life-saving medical treatment to detainees

Former Chilean President Bachelet put forward by UN chief as next High Commissioner for Human Rights

Treaty prohibiting nuclear weapons marks first anniversary, but still lacks sufficient numbers to become law

Meet the robot fighting back against coral reef destruction

How the North Korea-U.S. detente is a leveling of the playing field

How to make PHC a favourable career choice for medical students: Strategies and reflections

Why are wildfires getting worse?

3 reasons why Singapore is the smartest city in the world

Ebola fight ongoing amid evidence of ‘several massacres’ in DR Congo’s Ituri province

Eurostat: Real unemployment double than the official rate

Trump badly cornered at home by agribusiness and steel consumer lobbies: Trade

‘Free state aid’ for imprudent banks

Eurozone’s north-south growth gap to become structural

This AI-powered app aims to help people with autism improve their social skills

EU/African, Caribbean and Pacific partnership: MEPs list key aims for renewal

The big challenge of leadership and entrepreneurship in Europe

A Sting Exclusive: “Cybersecurity Act for a cyber-bulletproof EU”, by EU Vice-President Ansip

For video game addiction, now read official ‘gaming disorder’: World Health Organization

My Mothers

Brexit uncertainty keeps shaking the world’s financial markets

Get out, stay out: how financial resilience helps end poverty

The European Union and the United States reach an agreement on imports of hormone-free beef

Nearly a third of the globe is now on Facebook – chart of the day

The Social Committee may accept the new ‘contractual’ Eurozone

Take care of your borders and then expand them

Youth platforms call on German Government to break down legal barriers for young volunteers and pupils

The EU Commission by serving the banks offers poor support to European mainstream political parties

ECB’s Draghi favours a cheaper euro to serve all Eurozone countries

Welfare of transported animals: MEPs urge EU states to do a better job

Brexit: Is there anybody supporting a non-violent separation?

Measles in Europe: infection rates highest in a decade, says UN health agency

A very good morning in European markets

The Dead Sea is drying up, and these two countries have a plan to save it

The EU adopted €297 million in concrete actions for refugees and local communities in Jordan and Lebanon

How cities, not states, can solve the world’s biggest problems

Climate change is exacerbating hunger in some of the world’s poorest countries. And those most at risk are the least to blame

Why home is the least safe place to be a woman

The power of digital tools to transform mental healthcare

Scientists now think air pollution is fuelling violent crime

The clothes of the future could be made from pineapples and bananas

Youth unemployment: think out of the box

A seafood fraud investigation DNA tested fish sold in the US. Here’s what they found

How Eurozone consumers spend their income when they have one…

Greece will probably stay in the Eurozone but at what cost?

Young people meet in Malta to shape the future of Europe

Why we need a moderate approach to moderating online content

Thousands returning to Nigeria’s restive Borno state ‘at risk’; UN ‘gravely concerned’

‘Whole spectrum of Afghan society’ must get behind peace talks, UN envoy tells Security Council

Syria: ‘Deplorable’ violence in Idlib against civilians, humanitarian workers must ‘stop immediately’: UN Coordinator

Juncker Plan reaches almost €410 billion in triggered investment across the EU

Keeping cool in the face of climate change

America’s student debt crisis explained

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s