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Western Hemisphere > Argentina

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Cover IMF Staff Country Reports
Argentina: Fourth Review under the Stand-By Arrangement, Request for Waivers of Applicability and Modification of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Staff Supplement
International Monetary Fund. Western Hemisphere Dept.
This paper discusses Argentina’s Fourth Review of the Stand-By Arrangement, Request for a Waivers of Applicability and Modification of Performance Criteria, and Financing Assurances Review. The report highlights that with very high inflation and an increase in gross financing needs in coming months, discussions centered on how best to mitigate risks to the program, bolster market confidence, and calibrate monetary policy to continue bringing down inflation. The authorities have revamped their debt management strategy to support higher rollovers and an extension of average maturity of new issuance to the degree permitted by market conditions. The authorities have maintained a cautious approach to expenditure authorization in order to safeguard their program’s fiscal targets. The Argentine authorities’ efforts to increase rollover rates on public debt and to lengthen the maturity of new debt issuance should help mitigate financing risks in the period ahead. Ongoing efforts to improve the functioning of local sovereign debt markets will help improve market liquidity and lower financing costs.
Keywords:
ISCR; CR; effort; Arkansas; authority; expectation; market expectation; executive board discussion; LELIQ rate; authorities' effort; growth potential; end June; Fiscal stance; Monetary base; Public sector; Currencies; Global
Cover IMF Staff Country Reports
Argentina: Third Review under the Stand-By Arrangement, Request for Waivers of Applicability of Performance Criteria, Financing Assurances Review, and Request for Modification of Performance Criteria-Press Release and Staff Report
International Monetary Fund. Western Hemisphere Dept.
This paper discusses Argentina’s Third Review under the Stand-By Arrangement, Request for Waivers of Applicability of Performance Criteria, Financing Assurances Review, and Request for Modification of Performance Criteria. Discussions centered on the risks to the fiscal position, how best to counter the rise in inflation and inflation expectations, how best to mitigate debt rollover risks, and what more can be done to mitigate the impact of the economic downturn on the most vulnerable. The paper highlights that the Argentina economy continues to contract, albeit at a modestly slower pace than had been expected under the program. After a brief period of falling monthly inflation, price pressures and inflation expectations are again rising. Financial conditions improved in January, with declining sovereign spreads and a rally in the local equity market, but have since then erased much of those gains, with rising volatility in both currency and interest rates in March. All end-March performance criteria and fiscal targets are expected to be met.
Keywords:
ISCR; CR; deficit; inflation inertia; authority; debt; expectations rising; BCRA president; inflation outcome; LELIQ rate; Monetary base; Public sector; Fiscal stance; Currencies; Global
Cover IMF Staff Country Reports
Argentina: Second Review under the Stand-By Arrangement; Financing Assurances Review; and Request for Modification of Performance Criterion-Press Release; and Staff Report
International Monetary Fund. Western Hemisphere Dept.
The redesigned IMF-supported economic reform program is bearing early results. Financial markets have stabilized since end-September, following the adoption of the new monetary policy framework. After the appreciation of the currency in October, the peso has floated within the non-intervention zone. Short-term interest rates have fallen back to their end-September level. The passage of the 2019 Budget with broad political support has helped solidify confidence in the authorities’ stabilization plan. As a result, demand for Argentine bonds has strengthened and sovereign risk premia have narrowed.
Keywords:
ISCR; CR; wage inflation index; LELIQ rate; Base money; executive board discussion; CPI basket; end-December monetary base target; anchor inflation expectation; Inflation; Fiscal stance; Public sector; Monetary base; Global
Cover IMF Staff Country Reports
Argentina: First Review under the Stand-By Arrangement; Inflation Consultation; Financing Assurances Review; and Request for Rephasing, Augmentation, Waivers of Nonobservance and Applicability of Performance Criteria, and Modification of Performance Criteria-Press Release; Staff Report; and Staff Supplement
International Monetary Fund. Western Hemisphere Dept.
This paper discusses Argentina’s First Review Under the Stand-By Arrangement (SBA), Inflation Consultation, Financing Assurances Review, and Requests for Rephasing, Augmentation, Waivers of Nonobservance and Applicability of Performance Criteria. All performance criteria and the structural benchmark for end-June were met. The authorities have proactively recognized that restoring stability in Argentina will require a significant reshaping of their policy program and have requested changes in the nature of IMF support under the SBA. The authorities are forcefully strengthening their policy program by eliminating the primary fiscal deficit in 2019 and targeting a primary surplus in 2020. The IMF staff supports the authorities’ request to modify the program supported by the SBA.
Keywords:
ISCR; CR; y inflation; Center inflation target; Argentina; debt service; inflation expectation; verifiable monetary policy regime; budget support; liquidity position; draft budget; authorities' effort; Fiscal stance; Public sector; Monetary base; Global
Cover IMF Working Papers
Can Emerging Market Central Banks Bail Out Banks? A+L4848 Cautionary Tale From Latin America
Mr. Luis Ignacio Jácome
,
Tahsin Saadi Sedik
, and
Mr. Simon Townsend
This paper investigates whether developing and emerging market countries can implement monetary policies similar to those used by advanced countries during the recent global crisis - injecting significant amounts of money into the financial system without facing major short-run adverse macroeconomic repercussions. Using panel data techniques, the paper analyzes episodes of financial turmoil in 16 Latin America during 1995-2007. The results show that developing and emerging market countries should be cautious because injecting money on a large scale into the financial system may fuel further macroeconomic instability, increasing the chances of simultaneous currency crises.
Keywords:
WP; banking crisis; financial support; central bank money; market share; monetary policy; Banking crises; central banks; currency crises; financial stability; nominal exchange rate; central bank support; central bank credibility; currency depreciation; flight to quality; bank restructuring institution; central bank assistance; Currencies; Exchange rates; Monetary base; Global
Cover IMF Working Papers
Central Bank Involvement in Banking Crises in Latin America
Mr. Luis Ignacio Jácome
This paper reviews the nature of central bank involvement in 26 episodes of financial disturbance and crises in Latin America from the mid-1990s onwards. It finds that, except in a handful of cases, large amounts of central bank money were used to cope with large and small crises alike. Pouring central bank money into the financial system generally derailed monetary policy, fueled further macroeconomic unrest, and contributed to simultaneous currency crises, thereby aggravating financial instability. In contrast, when central bank money issuance was restricted and bank resolution was timely executed, financial disturbances were handled with less economic cost. However, this strategy worked provided appropriate institutional arrangements were in place, which highlights the importance of building a suitable framework for preventing and managing banking crises.
Keywords:
WP; banking crisis; foreign currency; financial market; exchange rate; monetary policy
Cover IMF Staff Country Reports
Uruguay: Third Review Under the Stand-By Arrangement and Request for Modification and Waiver of Nonobservance of Performance Criteria: Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Uruguay
International Monetary Fund
Strong economic policies and a supportive external environment have contributed to rapid growth, low inflation, strengthened external position, and an improved debt structure helping Uruguay perform well under the Stand-By Arrangement. Executive Directors commended the fiscal and monetary polices and urged to maintain exchange rate flexibility. They emphasized that restructuring of public banks would contain contingent fiscal liabilities. They appreciated the efforts to strengthen tax administration, and agreed that continued strong macroeconomic polices and progress with structural reforms will raise Uruguay’s growth prospects.
Keywords:
ISCR; CR; reform; interest expenditure; market financing program; staff appraisal; market borrowing; central bank of Uruguay; growth prospect; program's inflation objective; Public sector; Credit; Monetary base; Global
Cover IMF Working Papers
Monetary and Exchange Rate Dynamics During Disinflation: An Empirical Analysis
Ms. Lei Zhang
,
Mr. A. J Hamann
, and
Mr. Andres F Arias Leiva
Based on the observed behavior of monetary aggregates and exchange rates, we classify inflation-stabilization episodes into two categories: de facto exchange rate-based stabilizations (ERBS) and non-ERBS. Unlike the standard de jure ERBS studied in the literature, de facto ERBS encompass cases in which the central bank intervenes in the foreign exchange market but does not preannounce the use of an exchange rate anchor. The number of the de facto ERBS is twice as large as that of de jure ERBS. Output dynamics during disinflation do not differ significantly between these two groups. We conclude that empirical studies on the effects of exchange rate anchors must seek to disentangle the effects of their announcement from those related to their role in the remonetization process.
Keywords:
WP; cluster analysis; central bank; U.S. dollar
Cover IMF Survey
IMF Survey, Volume 33, Issue 16
International Monetary Fund. External Relations Dept.
In July, the IMF’s Independent Evaluation Office (IEO) released the findings of its review of the IMF-World Bank’s Poverty Reduction Strategy Paper (PRSP) process and the IMF’s Poverty Reduction and Growth Facility (PRGF).The main aims of the wide-ranging evaluation were to determine whether these two initiatives have been implemented according to original expectations and whether the IMF has been sufficiently supportive of the broader PRSP process. David Goldsbrough, Acting Director of the IEO, spoke with Jacqueline Irving of the IMF Survey about the report’s findings.
Keywords:
SV; IMF Concludes; Rodrigo de Rato; IMF S; fund Facility; equivalent amount; growth Facility; IMF survey; IMF Deputy managing director; Poverty reduction strategy; Domestic debt; Exchange rate stability; Monetary base; Consumption; Africa; Sub-Saharan Africa; Europe; Global; Western Hemisphere
Cover IMF Staff Country Reports
Argentina: Second Review Under the Stand-By Arrangement and Requests for Modification and Waiver of Performance Criteria
International Monetary Fund
This paper examines Argentina’s Second Review Under the Stand-By Arrangement and Requests for Modification and Waiver of Performance Criteria. The economy is recovering rapidly, while inflation remains subdued. Strengthening consumer and business confidence and cautious monetary and fiscal policies have facilitated further reductions in interest rates, a stable peso, and further reserve accumulation. Buoyant tax revenues resulted in larger-than-programmed fiscal savings in 2003. Although high commodity prices and strengthening partner country demand are pushing export receipts to record levels, imports also continue to surge, driven by buoyant economic activity.
Keywords:
ISCR; CR; debt; staff appraisal; banking strategy; authorities' cooperation; debt exchange offer; debt exchange; management bank; Debt restructuring; Arrears; Tariffs; Global