Argentina signs historically large IMF deal

Argentina and the International Monetary Fund (IMF) publicly announced an agreement yesterday to restructure the record USD 44 billion loan signed in 2018. It comes only days before the March 22 deadline that could have sent Argentina into an unprecedented default with multilateral credit institutions.

The country will have to jump through multiple fiscal and monetary hoops, as well as respect specific policy requirements, in order to receive fresh funds to face its 2022-2024 payment schedule. In practice, this means that Argentina will buy time until the maturities from the new arrangement start kicking in, between 2026 and 2034.

Disbursements will be conditional on quarterly reviews, in which IMF technicians will monitor whether Argentina is on schedule to meet its targets.

“IMF staff and the Argentinian authorities have reached a staff-level agreement on the economic and financial policies to be supported by a 30-month Extended Fund Facility (EFF) Arrangement. The EFF, with requested access of USD 45 billion, aims to provide Argentina with balance of payments and budget support to address the country’s most pressing economic challenges,” the fund said in a statement.

The text also pencils-in USD 760 million in payments spread throughout 2022 to the Paris Club, another international group of creditors led by Germany and Japan, where default loomed as a possibility as well.

Argentina had already signed a pre-agreement with the fund back in January, which outlined broad requirements in terms of fiscal deficit and Central Bank direct financing of the Treasury. The