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Argentina: Staff Report for the 2017 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. Western Hemisphere Dept.
Published Date:
December 2017
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Fund Relations

The 2017 Article IV discussions were held in Buenos Aires during October 30–November 10, 2017. The staff team comprised R. Cardarelli (head), L. Lusinyan, J. Canales-Kriljenko (all WHD), P. Dudine (FAD), A. Pienkowski (SPR), and F. Figueroa (LEG). J. A. Sarmiento Monroy (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. Lopetegui (OED) participated in the meetings.

Membership Status: Joined September 20, 1956; Article VIII

(As of October 31, 2017)

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
Holdings1,785.1788.37

Outstanding Purchases and Loans: None.

Latest Financial Arrangements:

TypeDate of

Arrangement
Expiration

Date
Amount Approved

(SDR Million)
Amount Drawn

(SDR Million)
Stand-BySep 20, 2003Jan 05, 20068,981.004,171.00
Stand-ByJan 24, 2003Aug 31, 20032,174502,174.50
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 Fund1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20172018201920202021
Principal
Charges/Interest0.331.541.541.541.54
Total0.331.541.541.541.54

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 2016 Article IV Consultation with Argentina was considered by the Executive Board on November 9, 2016.

Statistical Issues

(As of October 31, 2017)

I. Assessment of Data Adequacy for Surveillance

General: Data provision is adequate for surveillance, although structural breaks in several macroeconomic series (including CPI, employment, unemployment, poverty) hamper empirical analysis. At its November 9, 2016, meeting, the IMF Executive Board lifted the declaration of censure issued in 2013.

National Accounts: In June 2016, the National Institute of Statistics and Census (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. The 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 its November 9, 2016, meeting, the IMF Executive Board considered the new CPI series to be in line with international standards and lifted the declaration of censure issued in 2013. A new national CPI has been disseminated starting in June 2017.

Government Finance Statistics: Argentina disseminates data for central government operations and debt, and they have re-started to submit GFS data to the Statistics Department for the last GFSY on Expenses, Revenues and Transactions in Assets and Liabilities.

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. At the request of the authorities, a technical assistance mission on external sector statistics visited the INDEC in November 2016 and April 2017. Starting in September 2017, the INDEC is publishing the international accounts—jointly presenting in a single technical report the quarterly statistics of Balance of Payments, External Debt and the International Investment Position—following the recommendations of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). More recently, Argentina provided for the first time data to the IMF on the Coordinated Direct Investment Survey (CDIS), to be disseminated around end-December 2017.

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 has resumed reporting GFS data for publication in International Financial Statistics in 2017.

Relations with the World Bank1

The current Country Partnership Strategy (CPS) (FY15–FY18) was presented to the World Bank’s Board of Executive Directors in September 2014. It was developed in consultations with the Government and is built around nine specific results, most of which are aligned with the goal of eradicating poverty (e.g. ensuring access to safe drinking water; youth insertion into labor market; effective health care coverage; and improving the environment). The initial phase until December 2015 was focused on operations providing direct household support for the poorest in Argentina, mostly in the social and rural sectors. The engagement has significantly broadened since 2016.

New operations include large infrastructure works for flood protection, water and sanitation, and urban transformation. The World Bank Group also supported the Government in its first tendering of private renewable energy production (the RenovAR program) with a US$480 million guarantee. Policy advice and analytical studies have similarly expanded in a major way and now cover core structural reform areas including the financial sector and capital markets, housing finance, trade and competition.

In FY18, the IBRD portfolio in Argentina consists of 25 projects, including 22 investment loans, one guarantee and two trust fund grants for a total commitment of US$6.1 billion (average size of US$250 million). The overall indicative lending envelope for the four-year CPS period is between US$4 billion and US$4.8 billion, of which an amount of US$3.9 billion has already been committed. The portfolio includes eighteen new operations approved by the Board under the new Country Partnership Strategy.

As of October 31, 2017, IFC’s committed portfolio has reached approximately US$2.9 billion, including US$1.6 billion mobilized from third parties. There are 42 active clients, including regional ones with headquarters and operations based in Argentina. Today, Argentina’s portfolio represents approximately 10 percent of IFC’s committed portfolio for the LAC region. Under the current CPS, IFC has provided US$2.8 billion in long term financing, of which US$1.8 billion was mobilized from third parties. IFC also committed short-term trade financing in the amount of US$857 million over the same period. These investments included, among others, a US$500 million investment in Personal, a telecom company, to develop its 4G LTE broadband network; US$410 million for Renova, a company focused on soy crushing; US$50 million equity investment in Los Grobo, a leading agribusiness company; and a US$50 million loan to the City of Buenos Aires for urban transportation projects, IFC’s first municipal investment in Argentina (these amounts include mobilization). In FY18, IFC has so far provided US$167 million in long term financing in infrastructure, renewable energy and manufacturing projects, and an additional US$59 million in short-term trade financing.

Relations with the Inter-American Development Bank1

Argentina’s current Country Strategy covers the period 2016–19 and focuses on interventions and funding for three critical areas: (i) improvement of business climate; (ii) strengthening of economic integration and private sector insertion in global value chains; and (iii) reduction of poverty and inequality. Although the Strategy will support interventions in all regions of the country, it will continue to focus the support in the Norte Grande region and the Greater Buenos Aires area, where persists significant income and sectoral development gaps. The Strategy will support the Belgrano Plan for the Norte Grande region, especially in the areas of infrastructure, access to basic services and poverty reduction. Interventions and lending in the Greater Buenos Aires area will focus on supporting the Pobreza Cero Plan, particularly in the areas of early childhood development and of improving the water and sanitation services. Approvals for the period are projected at US$6 billion, including regional projects already identified with other countries, subject to the availability of Bank financial capital. This figure will be augmented by lending to the private sector by IDB Invest. The IDB is the main multilateral creditor of Argentina with a total debt owed of US$ 11.4 billion in 2016 (56.5 percent of Argentina’s total multilateral debt).

Under the 2016–19 Strategy the following initiatives were approved so far: 16 sovereign guarantee operations totaling US$2.3 billion, 60 private sector (non-sovereign guarantee) operations totaling US$514 million, and 21 non-reimbursable technical cooperation for US$5.9 million.

As of November 2017, Argentina’s sovereign loan portfolio is composed of 60 operations, totaling US$9.8 billion, with a disbursed percentage of 50 percent. The portfolio is distributed as follows: 62 percent dedicated to projects in the areas of infrastructure and energy, 17 percent in climate change and sustainable development, 12 percent in institutions for development, 8 percent in social sector, and 1 percent in integration and trade. Additionally, the private sector loans portfolio comprises 18 operations with an approved value of US$703 million, and the non-reimbursable technical cooperation portfolio includes 39 operations, with an approved value of US$37 million.

Argentina: Approved operations under the 2016–19 Strategy*
Number of operationsAmount (US$ million)
Sovereign guarantee**162,286.6
Non-sovereign guarantee60514
Technical cooperation**215.9

In the transition period between strategies from January 1st to November 15th 2016, there were 2 sovereign guarantee operations for US$420 million, 22 private sector operations totaling US$153 million, and 1 technical cooperation for $0.2 million.

Excluding regional operations.

In the transition period between strategies from January 1st to November 15th 2016, there were 2 sovereign guarantee operations for US$420 million, 22 private sector operations totaling US$153 million, and 1 technical cooperation for $0.2 million.

Excluding regional operations.

Argentina IDB Portfolio by type of operation*(As of November 10, 2017)
Number of operationsAmount (US$ million)
Sovereign guarantee609,816.5
Non-sovereign guarantee**18702.6
Technical cooperation3937

Excluding closed and fully disbursed operations.

As of September 30, 2017

Excluding closed and fully disbursed operations.

As of September 30, 2017

Argentina Sovereign Loan Portfolio by sector*(As of November 10, 2017)
SectorsNumber of operationsCurrent approved (US$ million)Disbursed (Percent)
Infrastructure and Energy226,09553.8
Institutions for Development171231.937.1
Climate Change and Sustainable Development151,63352.6
Social Sector478040.2
Integration and Trade276.33.5
TOTAL609,816.250

Excluding closed and fully disbursed operations.

Excluding closed and fully disbursed operations.

Argentina—Table of Common Indicators Required for Surveillance(As of November 14, 2017)
Date of latest observationDate receivedFrequency of data6Frequency of reporting6Frequency of publication6
Exchange RatesNovember 14, 2017November 14, 2017DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1November 14, 2017November 14, 2017DDD
Reserve/Base MoneyNovember 10, 2017November 10, 2017D#2D
Broad MoneyNovember 10, 2017November 10, 2017D#2D
Central Bank Balance SheetSeptember 2017October 2017M#2M
Consolidated Balance Sheet of the Banking SystemSeptember 2017October 2017M#2M
Interest Rates2November 10, 2017November 10, 2017D#2D
Consumer Price IndexOctober 2017November 14, 2017M#2M
Revenue, Expenditure, Balance and Composition of Financing3 – General Government42016February 2017A#2A
Revenue, Expenditure, Balance and Composition of Financing3– Central GovernmentSeptember 2017October 20, 2017M#2M
Stocks of Central Government and Central Government –Guaranteed Debt5Q1 2017June 30, 2017Q#2Q
External Current Account BalanceQ2 2017September 27, 2017Q#2Q
Exports and Imports of GoodsSeptember 2017October 24, 2017M#2M
GDP/GNPQ2 2017September 21, 2017Q#2Q
Gross External DebtQ2 2017September 27, 2017Q#2Q
International Investment Position7Q2 2017September 27, 2017Q#2Q

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.

Prepared by the World Bank staff.

Prepared by the Inter-American Development Bank staff.

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