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Western Hemisphere > Argentina

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Cover IMF Staff Country Reports
Argentina: Ex-post Evaluation of Exceptional Access under the 2022 Extended Fund Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Argentina
International Monetary Fund. Western Hemisphere Dept.
On March 25, 2022, the IMF Executive Board approved a 30-month arrangement for Argentina supported by the Extended Fund Facility (2022 EFF). Amounting to US$44 billion (1,001 percent of quota), it was the second largest non-precautionary arrangement in the Fund’s history after the 2018 Stand-by Arrangement for Argentina (2018 SBA). Of the planned 10 reviews, eight were completed. The arrangement is set to expire at end-2024.
Keywords:
program ownership; IMF view; disinflation process; Policy strategy; lending decision; risk tolerance; Fiscal consolidation; International reserves; Inflation; Reserves accumulation; Global
Cover IMF Working Papers
Crypto as a Marketplace for Capital Flight
Clemens M. Graf von Luckner
,
Robin Koepke
, and
Silvia Sgherri
This paper shows how cryptocurrency markets can fuel cross-border capital flight by serving as marketplaces that match counterparts with and without (illicit) access to FX. In countries where international transactions are restricted, crypto exchanges effectively allow domestic agents to pay a premium to buy foreign currency. The counterparts to these transactions are agents with access to FX, who sell crypto holdings purchased abroad. A stylized model illustrates that restricted foreign currency amid economic imbalances incentivizes these transactions via persistent crypto premia in local relative to global markets. We analyze relative crypto pricing data in several country case studies, providing empirical support that crypto markets serve as marketplaces for capital flight that already took place, rather than a novel channel for capital flight. We make available a novel dataset on crypto market premia, which we propose as indicators of excess demand for foreign currency and capital control intensity. The dataset will be posted along with this paper and updated periodically.
Keywords:
Capital flows; digital money; capital controls; cryptocurrency market; cross-border capital flight; crypto market; trading illicit capital flight; IMF working paper 24/133; Capital outflows; Currencies; Global
Cover IMF Staff Country Reports
Argentina: Eighth Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Modification of Performance Criteria, Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
International Monetary Fund. Western Hemisphere Dept.
This paper presents Argentina’s Eight Review under the Extended Arrangement under the Extended Fund Facility, Requests for Modification of Performance Criteria, Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review. Sustaining progress requires improving the quality of fiscal adjustment, taking initial steps toward an enhanced monetary and foreign exchange policy framework, and implementing reforms to unlock growth, formal employment, and investment. Greater focus on micro-level reforms will help support the recovery and boost potential growth. The proposed reforms aimed at improving competitiveness, increasing labor market flexibility, and improving the predictability of the regulatory framework for investment, are steps in the right direction, and their approval and careful implementation should be a priority. Risks, although moderated, are still elevated, requiring agile policymaking. Contingency planning will remain critical, and policies will need to continue to adapt to evolving outcomes to safeguard stability and ensure all program objectives continue to be met.
Keywords:
FX policy; BCRA FX purchase; FX gap; cost recovery; FX access tax; Exchange restrictions; Public sector; Global
Cover Selected Decisions and Selected Documents of the International Monetary Fund
Selected Decisions and Selected Documents of the International Monetary Fund
Forty-Third Issue
International Monetary Fund. Legal Dept.

Abstract

This volume is the Forty-Third Issue of Selected Decisions and Selected Documents of the International Monetary Fund. It includes decisions, interpretations, and resolutions of the Executive Board and the Board of Governors of the International Monetary Fund, as well as selected documents, to which frequent reference is made in the current activities of the Fund. In addition, it includes certain documents relating to the Fund, the United Nations, and other international organizations.

Keywords:
IMF; UN organization; International Organization; International Finance; Articles and Agreement; capital transfer; usable currency; use of fund's resource; Japanese yen; abrogation of rule; Currencies; Institutional View on capital flows; Loans; Multiple currency practices; Credit; Global; West Africa; Caribbean
Cover IMF Working Papers
Debt Surges—Drivers, Consequences, and Policy Implications
Florian Schuster
,
Marwa Alnasaa
,
Lahcen Bounader
,
Il Jung
,
Jeta Menkulasi
, and
Joana da Mota
Many countries find themselves with elevated debt levels, increased debt vulnerabilities, and tight financing conditions, while also facing increased spending needs for development and transition to a greener economy. This paper aims to place the current debt landscape in a historical context and investigate the drivers of debt surges, to what degree they result in a crisis as well as examine post-surge debt trajectories and under what conditions debt follows a non-declining path. We find that fiscal policy and stock-flow adjustments play important roles in debt dynamics with the valuation effects arising from currency depreciation explaining more than half of stock flow adjustments in LICs. Debt surges are estimated to result in a financial crisis with a probability of 11–20 percent and spending-driven fiscal expansions during debt surges tend to result in a high probability of non-declining debt path.
Keywords:
Public debt; debt surges; financial crisis; stock-flow adjustment; exchange rate depreciation; fiscal expansion; debt surge; surge episode; surge attribute; post debt path; surge debt trajectory; Contingent liabilities; Global
Cover IMF Working Papers
Currencies of External Balance Sheets
Mr. Cian Allen
,
Deepali Gautam
, and
Luciana Juvenal
This paper assembles a comprehensive dataset of the currency composition of countries’ external balance sheets for 50 economies over the period 1990–2020. We document the following findings: (i) the US dollar and the euro still dominate global external balance sheets; (ii) there were striking changes in the currency composition across countries since the 1990s, with many emerging markets having moved from short to long positions in foreign currency, thus moving away from the so-called “original sin”; (iii) financial and tradeweighted exchange rates are weakly correlated, suggesting the commonly used trade indices do not adequately reflect the wealth effects of currency movements, and (iv) the large wealth transfers across countries during COVID-19 and the global financial crises increased global imbalances in the former, and reduced them in the latter.
Keywords:
currency composition; international investment position; foreign currency exposure; wealth effect; currency movement; currency exposure; debt liability; currency mismatch risk; pound sterling; Currencies; Exchange rates; Global financial crisis of 2008-2009; Financial statements; Global
Cover IMF Staff Country Reports
Argentina: Fifth and Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility, Request for Rephasing of Access, Waivers of Nonobservance of Performance Criteria, Modification of Performance Criteria and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
International Monetary Fund. Western Hemisphere Dept.
This paper presents Argentina’s Fifth and Sixth Reviews under the Extended Arrangement under the Extended Fund Facility, Request for Rephasing of Access, Waiver of Nonobservance of Performance Criteria, Modification of Performance Criteria, and Financing Assurances Review. Since completion of the fourth review, key program targets were missed reflecting the historic drought along with policy slippages. Against the backdrop of high inflation and rising balance of payments pressures, agreement was reached on a new policy package centered on rebuilding reserves and enhancing fiscal order. Continued strong policy implementation will be critical in the period ahead to safeguard stability and strengthen medium-term sustainability. Risks remain elevated, reflecting an increasingly fragile economic and social situation, rising program implementation difficulties, and election-related uncertainties. In addition, risks could intensify should the projected improvements in climate conditions not materialize, or external conditions worsen. Moreover, even with steadfast implementation, elements of the new policy package may still need to be recalibrated to secure the intended results.
Keywords:
recovery objective; electricity price; staff appraisal; waivers of nonobservance of performance criteria; production cost estimate; policy package; Exchange restrictions; Multiple currency practices; Currency markets; Exchange rates; Global; Caribbean
Cover IMF Staff Country Reports
Argentina: Fourth Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Modification of Performance Criteria, Waiver for Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
International Monetary Fund. Western Hemisphere Dept.
This paper presents Argentina’s Fourth Review under the Extended Arrangement under the Extended Fund Facility (EFF), Requests for Modification of Performance Criteria, Waiver for Nonobservance of Performance Criteria, and Financing Assurances Review. Achieving the 2023 primary fiscal deficit target of 1.9 percent of gross domestic product remains essential to support disinflation and reserve accumulation, alleviate financing pressures, and strengthen debt sustainability. Timely implementation of high-quality measures, particularly improving the targeting of energy subsidies and social assistance, will help offset lower export taxes due to the drought, protect priority infrastructure and social spending, and secure the fiscal targets. “Real interest rates should remain sufficiently positive to tackle high inflation and support demand for peso assets. On the domestic financing front, prudent efforts will be needed to mitigate near-term rollover risks and mobilize net financing, while limiting the build-up of vulnerabilities and protecting debt sustainability.
Keywords:
waiver of nonobservance; pension moratorium; financing strategy; nonobservance of the performance criteria; step-up interest rate structure; Inflation; Natural disasters; Imports; Global
Cover IMF Staff Country Reports
Argentina: Third Review Under the Extended Arrangement Under the Extended Fund Facility, Request for Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Argentina
International Monetary Fund. Western Hemisphere Dept.
Early decisive policy implementation by the new economic team was critical to stabilizing markets and begin rebuilding confidence in the run-up to the second review. Domestic demand has since slowed in response to tighter macroeconomic policies, with high frequency indicators pointing to a further moderation in inflation, a contraction in goods imports, and improvements in the trade balance. Nonetheless, and against a more challenging external and domestic backdrop, the situation remains fragile. Inflation is still high and unanchored, reserves are low, and confidence needs further strengthening. Moreover, social discontent has risen amid spending restraint and some decline in real wages. Review discussions focused on strengthening macroeconomic policies to safeguard stability and achieve program objectives, especially a durable reduction in inflation and improvement in reserve coverage.
Keywords:
market inflation expectation; fund staff calculation; Net International reserves; reference rate; price inflation; Inflation; Multiple currency practices; Exchange restrictions; Global; Western Hemisphere
Cover IMF Staff Country Reports
Argentina: Second Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Waivers of Applicability and Nonobservance of Performance Criteria, Modification of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
International Monetary Fund. Western Hemisphere Dept.
Episodes of domestic policy uncertainty and acute market pressures in mid- 2022, coupled with a more challenging global environment, necessitated firmer program implementation and stronger policy reaction to ensure macroeconomic stability, rebuild policy credibility, and safeguard program objectives. Initial decisive actions and strengthened commitments by the new economic team since early-August have started to stabilized markets, although the situation is fragile as reserve coverage remains low while inflation is unanchored and stands at multi-year highs. The review discussions focused on assessing recent progress, updating the macroeconomic framework, and reaching understandings on a solid policy package to durably restore stability and achieve the program objectives.
Keywords:
central bank financing; NDF market; financing of the federal government; non-deliverable futures; policy credibility; Inflation; International reserves; Government debt management; Global