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Western Hemisphere > Argentina

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Cover The IMF’s Exceptional Access Policy
The IMF’s Exceptional Access Policy
Evaluation Report Dec 2024
Vivek B Arora
,
Miguel de Las Casas
,
Yasemin Bal Gündüz
,
Jérémie Cohen-Setton
,
Kelsie J Gentle
,
Jiakun Li
,
Carmen Rollins
, and
Sandra Saveikyte

Abstract

The evaluation assesses the EAP’s rationale, evolution, and implementation during the period since its adoption in 2002. It assesses whether the EAP has fulfilled the objectives that guided its creation, namely, shaping members’ and market expectations, providing clearer benchmarks for Board decisions on program design and exceptional access, safeguarding the Fund’s resources, and helping to ensure uniformity of treatment of members. The evaluation draws on background papers comprising both thematic and country studies that draw on experience with the 38 exceptional access programs completed through mid-2023. The thematic papers analyze the rationale and evolution of the EAP as well as the three building blocks of the policy: the exceptional access criteria, enhanced Board decision-making procedures, and ex post evaluations. The country papers comprise both cross-country studies and country-specific studies of the completed programs with Argentina (2018), Ecuador (2020), and Egypt (2020).

Keywords:
Exceptional access; IMF lending; safeguarding Fund resources; program design; uniformity of treatment; risk management; program success; EA program; surcharge rate; ToC of an Na arrangement; detailed Theory of Change; Debt sustainability; Reputational risk; Balance of payments need; Capital account crisis; Global
Cover Technical Notes and Manuals
Understanding Artificial Intelligence in Tax and Customs Administration
Joshua Aslett
,
Stuart Hamilton
,
Ignacio Gonzalez
,
David Hadwick
, and
Michael A Hardy
This technical note provides an overview of current thinking on artificial intelligence (AI) in tax and customs administration. Written primarily for senior officials, the intent of the note is to provide an awareness of AI that can help inform decision making and planning. The note opens with an exploration of historic and ongoing AI developments. It then provides an overview of legal and ethical concerns, AI use cases, guidance on how to promote AI's responsible use, and logic for introducing AI use cases into an operational setting. The note closes by presenting a selection of questions being debated by experts. In its annexes, the note includes (1) an example of an AI policy; (2) references to help develop AI strategy; and (3) methodology to risk assess AI use cases.
Keywords:
tax administration; customs administration; artificial intelligence; generative artificial intelligence; AI regulation; strategy and planning; use case; AI strategy; understanding AI; AI Policy; risk assessment; Tax administration core functions; Customs administration core functions; Training and development in revenue administration; Europe; Global
Cover Policy Papers
Initial Considerations For The Review Of Charges And The Surcharge Policy
International Monetary Fund. Policy Development and Review Dept.
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.



Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.



Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.



The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
Keywords:
General Resources Account; Charges; Margin for the basic rate of charge; Surcharges; Commitment Fees; Precautionary Balances; Income; multilayered framework; fund arrangement; surcharge rate; intermediation cost; fund's liquidity; borrowing cost; Credit; SDR interest rate; Balance of payments need; Credit risk; 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 Policy Papers
Review of the Adequacy of the Fund’s Precautionary Balances
International Monetary Fund. Finance Dept.
On March 20, 2024, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place somewhat ahead of the standard two-year cycle, in view of the imminent attainment of the current indicative medium-term indicative target of SDR 25 billion for the first time. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. The review was based on the assessment framework established in 2010, which uses an indicative range for precautionary balances, linked to a forward-looking measure of total IMF non-concessional credit, to guide decisions on adjusting the medium-term target over time. While financial risks remain high, they are broadly unchanged from the last review, taking into account the further accumulation of reserves and strengthening of some risk mitigants. Against this background, Executive Directors broadly supported staff’s proposal to retain the current medium-term target of SDR 25 billion and increase the minimum floor from SDR 15 billion to SDR 20 billion. The Board also supported maintaining the biennial review cycle, with earlier reviews if warranted by developments that could materially affect the adequacy of precautionary balances.
Keywords:
Non-concessionary; Lending; Risks; Reserves; Credit; Mitigation; Provisioning; management framework; income risk; concentration risk; Fund credit; I. financial risks; demand scenario; lending portfolio; Credit risk; Income; Capital adequacy requirements; Market risk; Global
Cover IMF Staff Country Reports
Chile: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper studies renewable energy and attempts to estimate the gross domestic product (GDP) impact and assesses the role of policies in Chile. Chile has a comparative advantage in renewable energy. IMF estimates show that replacing coal power with solar and wind power, as announced by the government, could boost the long-term GDP level by at least 1 percentage point. The analysis indicates that the benefits of having targeted support for the transmission of electricity exceed costs. An additional benefit is the greater economic resilience to abrupt increases in coal and fuel prices that can have large negative impacts on the economy. A key constraint for the renewable energy sector is currently the transmission from where it is produced to where it is used. A cost-benefit analysis shows that state support industries, such as electricity transmission, may have economic benefits that outweigh the costs.
Keywords:
GDP impact; solvency risk; Chilean bank; Fintech firm; cybersecurity risk; Electricity; Cyber risk; Fintech; Energy sector; Financial inclusion; Global
Cover Policy Papers
Review Of The Adequacy Of The Fund’s Precautionary Balances
International Monetary Fund. Finance Dept.
On December 12, 2022, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place on the standard two-year cycle, after an interim review in December 2021. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. In conducting the review, the Executive Board applied the rules-based framework agreed in 2010. Precautionary balances have risen further since the 2021 interim review and coverage metrics have strengthened. At the same, credit and other financial risks have also increased. The pace of reserve accumulation is expected to remain adequate. Against this background, Executive Directors endorsed staff’s proposal to retain the current medium-term target of SDR 25 billion and the minimum floor of SDR 15 billion. The Board also discussed the role of surcharges, which are primarily a component of the Fund’s risk management framework but also contribute to reserves accumulation.
Keywords:
concentration risk; D. financial risks; risk management framework; Fund credit; transparency policy; fund financial risks; Income; Credit; Credit risk; Credit ratings; Emergency assistance; Global; Caribbean; Western Hemisphere
Cover IMF Working Papers
The Sovereign-Bank Nexus in Emerging Markets in the Wake of the COVID-19 Pandemic
Andrea Deghi
,
Mr. Salih Fendoglu
,
Tara Iyer
,
Mr. Hamid R Tabarraei
,
Yizhi Xu
, and
Mustafa Yenice
The COVID-19 pandemic has brought the relationship between sovereigns and banks—the so-called sovereign-bank nexus—in emerging market economies to the fore as bank holdings of domestic sovereign debt have surged. This paper examines the empirical relevance of this nexus to assess how it could amplify macro-financial stability risks. The findings show that an increase in sovereign credit risk can adversely affect banks’ balance sheets and credit supply, especially in countries with less-well-capitalized banking systems. Sovereign distress can also impact banks indirectly through the nonfinancial corporate sector by constraining their funding and reducing their capital expenditure. Notably, the effects on banks and corporates are strongly nonlinear in the size of the sovereign distress.
Keywords:
Sovereign-bank nexus; emerging markets; financial stability; sovereign risk; COVID-19; banking sector; corporate investment; outcome variable; Annex I. data description; summary statistics; Emerging and frontier financial markets; Capital adequacy requirements; Commercial banks; Credit default swap; Global
Cover Policy Papers
Interim Review of The Adequacy of The Fund’s Precautionary Balances
International Monetary Fund. Finance Dept.
Precautionary balances are a key element of the Fund’s multilayered framework to mitigate financial risks. Overall financial risks remain elevated but have not increased significantly since the last review. Staff proposes to leave the medium-term target of SDR 25 billion, and the minimum floor of SDR 15 billion, unchanged at this time. With the projected increase in lending income, the pace of reserve accumulation is expected to remain adequate relative to the medium-term indicative target. The paper also reviews policy factors discussed in recent Board meetings that affect the level and accumulation of reserves.
Keywords:
risk management framework; transparency policy; D. financial risks; income volatility; totaling SDR; Income; Credit; Credit risk; Pension spending; COVID-19; Global
Cover IMF Staff Country Reports
Bolivia: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bolivia
International Monetary Fund. Western Hemisphere Dept.
Following the October 2020 election, the new administration moved to tackle the devastating human and economic effects of the COVID-19 pandemic. The economy shows signs of recovery from its 8.8 percent contraction in 2020. However, fiscal imbalances have increased and international reserves continue to fall. On February 12, Bolivia repurchased the 240.1 million SDR purchase under the Fund’s Rapid Financing Instrument (that was approved by the Fund’s Executive Board in April 2020).
Keywords:
IMF staff visit; government administration; U.S. dollar; health personnel; import substitution policy; one-off expenditure item; Public sector; Exchange rate flexibility; COVID-19; Global; Caribbean