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Argentina: Staff Report for the 2016 Article IV Consultation-Informational Annex

Author(s):
International Monetary Fund. Western Hemisphere Dept.
Published Date:
November 2016
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Fund Relations

The 2016 Article IV discussions were held in Buenos Aires and Cordoba during September 19–30. The staff team comprised R. Cardarelli (head), L. Lusinyan, J. Canales-Kriljenko, D. Singh (all WHD), M. Ortiz Villafañe (WHD, local economist), P. Dudine (FAD), L. Jacome (MCM), A. Pienkowski (SPR), Ch. DeLong, and F. Figueroa (both LEG). J. L. Saboin (WHD) provided research assistance. Mr. Werner (WHD) joined the concluding meetings. The mission met with senior officials and representatives of private sector, finance industry, academics, and think-tanks. Mr. Torres (OED) participated in the meetings.

Membership Status: Joined September 20, 1956; Article VIII

(As of August 31, 2016)

General Resources Account:SDR MillionPercent of Quota
Quota3,187.30100.00
IMF Holdings of Currency2,919.5791.60
Reserve Tranche Position267.758.40
SDR Department:SDR MillionPercent of Quota
Net cumulative allocation2,020.04100.00
Holdings1,785.4888.39

Outstanding Purchases and Loans: None.

Latest Financial Arrangements:
Date ofExpirationAmount ApprovedAmount Drawn
TypeArrangementDate(SDR Million)(SDR Million)
Stand-BySep 20, 2003Jan 05, 20068,981.004,171.00
Stand-ByJan 24, 2003Aug 31, 20032,174.502,174.50
Stand-ByMar 10, 2000Jan 23, 200316,936.809,756.31
of which SRFJan 12, 2001Jan 11, 20026,086.665,874.95
Overdue Obligations and Projected Payments to Fund 1/(SDR Million; based on existing use of resources and present holdings of SDRs):
Forthcoming
20162017201820192020
Principal
Charges/Interest0.020.190.190.190.19
Total0.020.190.190.190.19

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative: Not Applicable.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable.

Implementation of Catastrophe Containment and Relief (CCR): Not Applicable.

As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.

Exchange Rate Arrangements: Argentina’s currency is the Argentine peso. The exchange rate arrangement is classified as floating from December 17, 2015. Argentina has accepted the obligations of Article VIII, Sections 2, 3, and 4. As part of the 2016 Article IV Consultation mission to Argentina, a review of the exchange system for compliance with Article VIII, Sections 2(a) and 3 of the Articles of Agreement was conducted. The restrictive exchange regime put in place in 2011 (the “cepo cambiario”) has been removed, and Argentina maintains an exchange rate system free of restrictions on payments and transfers for current international transactions, other than restrictions notified to the Fund under Decision No. 144 (52/51).

Last Article IV Consultation: The Staff Report for the 2006 Article IV Consultation with Argentina was considered by the Executive Board on July 28, 2006.

Statistical Issues

(As of October 3, 2016)

I. Assessment of Data Adequacy for Surveillance

General: Data provision is adequate for surveillance, although structural breaks in a number of macroeconomic series (including CPI, employment, unemployment, poverty) hamper empirical analysis. The status of Argentina with respect to the accuracy of the CPI and GDP data will be reassessed by the IMF Executive Board on November 9.

National Accounts: In June 2016, INDEC disseminated a new GDP series for 2004–15., which the IMF Executive Board assessed in August 2016 to be in line with international standards. INDEC published a methodology note and detailed estimates by economic activity of the GDP in September 2016. These actions increase data availability and transparency of the national accounts.

Price statistics: A new CPI was disseminated in June 2016 with coverage restricted to Greater Buenos Aires. At the request of INDEC, an IMF technical assistance mission visited Buenos Aires during September and October 2016 to assess progress on improving CPI methods and to assist with developing a national CPI. By October 2016, INDEC is planning to develop and disseminate a national CPI that is scheduled for release in early 2019, using data from a new household expenditure survey to be compiled in 2017–18.

Government Finance Statistics: Argentina disseminates data for general government operations, central government operations, and central government debt.

Monetary and Financial Statistics: Only highly summarized data for the central bank and other depository corporations are reported to STA. Data for other financial corporations, such as insurance companies, pension funds, and investment funds, are not reported.

Financial sector surveillance: Data for the core and nine encouraged FSIs are reported quarterly.

External sector statistics: Argentina disseminates timely balance of payments, International Investment Position (IIP), external debt, and the statistical framework of international reserves and foreign currency liquidity, but the periodicity of the IIP is annual rather than quarterly. Data provision is under the fifth edition of the Balance of Payments Manual (BPM5), circumstance that contributes to Argentina’s argument for not recording liabilities pertaining to SDR’s allocations in the balance of payments and IIP. Data re-disseminated by STA and converted to the updated balance of payments manual, BPM6, includes these data, although it may be absent in external debt reported to the World Bank. At the request of the authorities, a technical assistance mission on external sector statistics will visit the National Institute of Statistics and Census (INDEC) in November 2016. INDEC is the agency in charge of compiling and disseminating the balance of payments and IIP. The main emphasis of the mission will be to assist the authorities to facilitate the provision of quarterly IIP data.

II. Data Standards and Quality

Subscriber to the Fund’s Special Data Dissemination Standard (SDDS) since 1996. No Data ROSC has been conducted.

III. Data Submission to STA

Argentina does not report GFS data for publication in International Financial Statistics (IFS) and its last submission for the Government Finance Statistics Yearbook (GFSY) was in 2004. The authorities are encouraged to resume the regular data submission for the IFS.

Argentina—Table of Common Indicators Required for Surveillance(As of October 3, 2016)
Date of latest observationDate receivedFrequency of data6Frequency of reporting6Frequency of publication6
Exchange RatesOctober 3, 2016October 3, 2016DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1October 3, 2016October 3, 2016DDD
Reserve/Base MoneyOctober 3, 2016October 3, 2016DDD
Broad MoneyOctober 3, 2016October 3, 2016DDD
Central Bank Balance SheetAugust 2016September 2016MMM
Consolidated Balance Sheet of the Banking SystemAugust 2016September 2016MMM
Interest Rates2October 3, 2016October 3, 2016DDD
Consumer Price IndexAugust 2016September 21, 2016MMM
Revenue, Expenditure, Balance and Composition of Financing3– General Government42015February 2016AAA
Revenue, Expenditure, Balance and Composition of Financing3– Central GovernmentAugust 2016September 21, 2016MMM
Stocks of Central Government and Central Government –Guaranteed Debt5Q2 2016June 30, 2016QQQ
External Current Account BalanceQ2 2016September 20, 2016QQQ
Exports and Imports of GoodsAugust 2016September 27, 2016MMM
GDP/GNPQ2 2016September 22, 2016QQQ
Gross External DebtQ2 2016September 20, 2016QQQ
International Investment Position7Q2 2016September 20, 2016QQQ

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and provincial governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and provincial governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Relations with the World Bank1

The current Country Partnership Strategy (FY15–FY18) was presented to the World Bank Board of Executive Directors in September 2014. The CPS, developed in consultations with the Government, is built around nine specific results, most of which are aligned with the Government’s Pobreza Cero goal of eradicating poverty (e.g., access to safe drinking water; youth insertion into labor market; effective health care coverage; environmental clean-up). The Bank Group resumed lending to Argentina after more than three years in 2014 with the first set of IBRD operations explicitly focusing and directly supporting the vulnerable and the poor.

Currently, the IBRD portfolio consists of 21 investment projects for a total commitment of US$5.8 billion (average size US$275 million) and of 3 big trust funds (two of GEF and one Montreal Protocol TF) for a total of US$23.4 million. The overall approximate lending envelope for the four-year CPS period is between US$4 billion and US$4.8 billion, US$2.4 billion of which has already been committed. The portfolio includes ten new operations approved by the Board under the new Country Partnership Strategy. As of June 30, 2016, Argentina’s exposure to the World Bank Group was US$6,862 million (exposure to IBRD was US$ 5,737 million).

The Bank has agreed with the government on the lending program for FY17. In addition to the three operations already approved in the water, social protection and trade areas for a total amount of US$845 Million, the package includes a project to support financing of small and medium enterprises, two urban transformation projects, a water and sanitation project, an energy renewables guarantee, an additional financing for the Metropolitan Urban Transport Project, and a state modernization project.

IFC has committed $1.9 billion (during FY15–FY16) in 22 projects, consisting of $1 billion from its own account and $895 million in mobilization. The 22 projects of the IFC portfolio comprise 14 long-term finance projects ($344 million IFC + $895 million mobilization) and 8 trade finance projects—$672 million. As of end-FY16, the IFC portfolio stood at $1.7billion with 40 Projects. IFC is on target to reach and potentially overshoot the investment commitment targeted for end FY18 ($1.7 billion).

Relations with the Inter-American Development Bank2

Argentina’s current Country Strategy covers the period 2012–15, and focuses on interventions and funding for two critical areas: the Norte Grande region and the Greater Buenos Aires area. The first of these areas exhibits the lowest relative level of economic development in the country, together with the highest incidence of poverty and social exclusion. The second suffers from high levels of social exclusion, with major challenges for urban sustainability. Given the proposed geographic focus, the Bank’s strategy is based on the following objectives: the alleviation of obstacles to growth with a special focus in Norte Grande; social and economic inclusion of the population, focused on both regions; and urban sustainability and habitat improvement, with particular emphasis on the Greater Buenos Aires area. The IDB is the main multilateral creditor of Argentina with a total debt owed of US$11.2 billion in 2015 (53.6 percent of Argentina’s total multilateral debt).

Under the 2012–15 Strategy the following initiatives were approved: 15 sovereign guarantee operations totaling US$2.6 billion, 28 private sector (non-sovereign guarantee) operations totaling US$ 325.1 million, and 29 non-reimbursable technical cooperations for US$12 million. In addition, another 3 sovereign guarantee operations for US$353 million and 4 technical cooperations for nearly $1 million were approved in the first nine months of 2016.

As of September 2016, Argentina’s sovereign loan portfolio is composed of 47 operations, totaling US$7.5 billion, with a disbursed percentage of nearly 58 percent. The portfolio is distributed as follows: 36 percent dedicated to projects in the areas of infrastructure and energy, 28 percent in climate change and sustainable development, 25 percent in institutions for development, 6 percent in social sector, and 4 percent in integration and trade. Additionally, the private sector loans portfolio comprises 13 operations with an approved value of US$247.5 million, and the non-reimbursable technical cooperation portfolio includes 30 operations, with an approved value of US$30.7 million.

Argentina: Approved Operations Under the 2012–15 Strategy and Transition Period
2012–15 Country StrategyJanuary–September 2016
Number of operationsAmount (US$ million)Number of operationsAmount (US$ million)
Sovereign guarantee152,6143353
Non-sovereign guarantee28325.100
Technical cooperation291240.97
Argentina: IDB Portfolio by Type of Operation*(As of September 30, 2016)
Number of operationsAmount (US$ million)
Sovereign guarantee477,485
Non-sovereign guarantee13247.5
Technical cooperation3030.7

Excluding closed and fully disbursed operations.

Excluding closed and fully disbursed operations.

Argentina: Sovereign Loan Portfolio by Sector*(As of September 30, 2016)
SectorsNumber of operationsCurrent approved (US$ million)Disbursed (Percent)
Infrastructure and Energy174,51061.8
Climate Change and Sustainable Development131,58350.4
Institutions for Development1275346.3
Social Sector363059.9
Integration and Trade2937.5
TOTAL477,48557.7

Excluding closed and fully disbursed operations.

Excluding closed and fully disbursed operations.

1Prepared by the World Bank staff.
2Prepared by the Inter-American Development Bank staff.

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