After much speculation after the intense debates days ago, finally this Friday the executive board of the International Monetary Fund approved the agreement with Argentina to refinance the loan of US$45,000 million that Argentina took in 2018. Thus, the entry into the country of almost US$10,000 million, according to what Minister Martín Guzmán anticipated.

The first disbursement from the IMF will arrive before the end of the month and will reach US$9.8 billion. With this, the Government will cancel the maturity of US$2.8 billion that was originally operating at the beginning of the week and that was postponed until March 31.

The rest of the money will be added to the reserves of the Central Bank (BCRA), which for days have threatened to break the floor of US$37,000 million despite the more than US$400 million that the entity bought so far in March.

It is an agreement of extended facilities (EFF, for its acronym in English), which sets a grace period of 4 and a half years, so that the first payments will be made from 2026 to 2034.

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Among its main characteristics, the following stand out:

  • • Between 2022 and 2026 there will be disbursements from the IMF to cover the original maturities (of the 2018 program) and accumulate reserves. Each new income of funds will be tied to the fulfillment of certain goals, which the IMF will review on a quarterly basis.
  • • Sets targets for reducing the fiscal deficit of 2.5% of GDP in 2022; 1.9% of GDP in 2023; and 0.9% in 2024.
  • • The fiscal red will be financed mainly with the placement of public debt in pesos and the support of the international community. With this, it aims to reduce the monetary issue to finance the Treasury and bring it to zero in 2024.
  • • Rates for both residential and non-residential users will be reviewed and the most important increases will be made in “those sectors with greater payment capacity”. The aim is to achieve a segmentation of rates into 3 levels for the 2022-2023 biennium to reduce subsidies by a figure equivalent to 0.6% of GDP.
  • • Greater control over taxpayers was agreed to improve collection and a change in the real estate revaluation methodology (in CABA said the head of the AFIP, Mercedes Marcó del Pont) to add resources via the Tax on Personal Assets.
  • • The agreement understands inflation as a multicausal phenomenon and not exclusively monetary. A floor of 38% and a maximum of 48% is estimated for this 2022 and a path of decline of 5 percentage points per year for the following.
  • • The Government said that there will be no sharp jump in the dollar; that is, there will be no abrupt devaluation. The competitive exchange rate scheme will be maintained through the managed float as an exchange strategy.
  • • December 2022 is set as the date to present a roadmap that allows the dollar to exit the stocks, gradually and gradually, which accompanies the objective of returning to international markets by 2025.
  • • It was agreed that investment in infrastructure will exceed 2% of GDP in 2022, prioritizing road works, urban transport, expansion of water and sanitation access networks, housing plans (Procrear) and other essential works such as the gas pipeline to Vaca Dead.
  • • In December 2022, the social plans considered strategic by the Government will be reviewed: AUH, Food Card and Plan Progresar.
  • • The agreement does not include any pension reform. As explained by the Government, spending on retirement and pensions will continue with the mobility formula that governs from 2021.

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Source: TN