Argentina is negotiating for a large upfront payment from a US$20 billion IMF programme to bolster its reserves. The negotiations focus on disbursement timing and size, vital for economic stability pre-election. Previous IMF agreements faced challenges, highlighting the importance of effective fund management.
Argentina is negotiating with the International Monetary Fund (IMF) to receive a large upfront payment from its future US$20-billion programme. The focus is on determining the amount and timing of these disbursements, which typically occur gradually, requiring countries to meet specific benchmarks. However, the current priority is obtaining a significant initial disbursement to boost Argentina’s international reserves.
The Treasury intends to utilize part of the IMF funds to repay its debt with the Central Bank through non-transferable notes, facilitating the recapitalization of the Central Bank. Argentina’s Economy Ministry has not clarified how much upfront funding is being requested in the negotiations, while the IMF has indicated that the amounts and timing are still under discussion.
On Thursday, Chief Spokeswoman for the IMF, Julie Kozack, stressed that disbursements will be made in tranches over the programme’s lifecycle, although specific details are being negotiated. Investors remain attentive to this aspect following Economy Minister Luis Caputo’s confirmation that the total deal will amount to US$20 billion, as earlier reported by Bloomberg News.
Morgan Stanley, in its economic analysis, anticipates a US$5 billion initial disbursement in 2025, in addition to securing another US$5 billion from other international institutions. Caputo noted that approval from the IMF’s executive board might take several weeks, although no specific timeline was provided.
Currently, combining anticipated funds from the IMF, the World Bank, and others could increase Argentina’s Central Bank reserves to nearly US$50 billion, up from the current US$26.2 billion. Previous negotiations for frontloading have influenced Argentina’s IMF agreements, notably in 2018 and 2022, both of which struggled to stabilize the economy. In 2018, the IMF increased frontloaded funding to US$57 billion, which later faced issues due to political instability and currency problems.
Ultimately, Argentina’s ability to secure upfront funding is crucial for its economic stability, particularly as it approaches another presidential election, following prior experiences where funds were mismanaged or conditions not met.
Argentina is actively pursuing an upfront payment from its IMFs US$20 billion programme to enhance its international reserves. The negotiations are centered around the timing and size of disbursements, with investors closely observing the situation. Previous experiences with IMF agreements have raised concerns about economic stability pre-election, and the current strategies aim to avoid past pitfalls while securing necessary funds for the Central Bank.
Original Source: batimes.com.ar
