In a news brief issued on December 18, IMF Managing Director Horst Köhler said he was “pleased to announce that the Argentine authorities and an IMF staff team have reached agreement on a strengthened economic program, aimed at boosting the productivity and competitiveness of the Argentine economy and ensuring medium-term fiscal balance. This should improve the investment climate and, together with enhanced domestic and external confidence, lay the ground for sustained economic growth in Argentina.
“I am now prepared to recommend to the IMF Executive Board an increase of Argentina’s access to IMF financing by SDR 5.2 billion (about $6.7 billion) to a total of SDR 10.6 billion (equivalent to about $13.7 billion at the current U.S. dollar-SDR exchange rate), or 500 percent of quota. Of the total, 100 percent of quota ($2.74 billion) will be made available under the Supplemental Reserve Facility, with the remainder provided under normal Stand-By terms. The enhanced financial support from the IMF is expected to be complemented by new loan commitments from the World Bank and the Inter-American Development Bank for the next two years, totaling nearly $5 billion, and a $1 billion loan from the government of Spain, to be disbursed in 2001, pari passu with the Stand-By Arrangement. A drawing in the amount of about $2 billion of the accumulated rights under the existing precautionary Stand-By Arrangement is expected to take place in the coming days.
“I welcome the understanding reached by the authorities with private sector market participants to provide financial support on the order of $20 billion, of which about $13.5 billion is expected to be disbursed in 2001.
“The Argentine economy continued to suffer in 2000 from the impact of adverse external and domestic developments, which prevented a sustained recovery of economic activity and set back the government’s efforts to reduce the fiscal deficit. The government is responding to these developments through a strengthened growth-oriented economic strategy, aimed at promoting an acceleration of productivity growth and further improvements in competitiveness. The strategy centers on a strong commitment by the federal and the provincial governments to steadily reduce their deficits, reaching balance by, at the latest, 2005; wide-ranging structural fiscal reforms to underpin this commitment; and a broadening and acceleration of the efforts to further modernize and open up the economy. Successful implementation of these policies will also have an important and positive impact in the region,” Köhler said.
The text of IMF News Brief No. 00/117 is also available on the IMF’s website, www.imf.org.