International Monetary Fund grants government request, acknowledging impact pf drought on foreign currency inflows.
The International Monetary Fund (IMF) has eased Argentina’s net reserves accumulation target for the year by US$1.8 billion, making a concession to the government and its warnings of the negative impact of a punishing drought on export earninings.
The new target for 2023 is US$9.8 billion, said the Fund in a report that admitted that the risks facing Argentina’s US$44.5 billion debt deal “are now higher, due to less favourable economic conditions”.
Reserves targets will also change for each quarter of the year, lowering the bar for Argentina to pass future reviewsm though the adjustment will be weighted towards early 2023. The end of first quarter target, for example, has been lowered to US$1.9 billion in the wake of the poor harvest,
“The cumulative target through end-2024 rwmains unchanged at US$15 billion, given the drought’s assumed temprary impact”, said the Funda.
Net reserves, or the stockpile of cash at the Central Bank, are seen as crucial to preventing a major currency devaluation”.
The report was published a few days after the Fund’s executive board signed off the review, in turn approving disbursemente of US$5.3 billion to Argentina. Including this latest tranche, the country has received US$28.9 billion since the start of the programme in March 2022.
The IMF earlier on April called on Argentina to make stronger efforts to address foreign reserve losses, galloping inflation and other “policy setbacks”.
Argentina recorded 5.2 percent economic growth in 2022, a slowdown compared to 2021, but still talluing a second consecutive year of xpansion, the first such period since 2010-2011.