ANNEX Program Summary
The Argentine authorities view the transitional program as a step to a comprehensive program required to restore fiscal and external viability. By maintaining macroeconomic stability during the presidential election period, the authorities hope the program will create conditions that will facilitate a successor government, which is expected to take office in late May, to adopt a comprehensive medium-term economic program.
The transitional program is focused on monetary and fiscal policies, and steps towards banking reform, during the first half of 2003. The monetary program seeks to restrain monetary growth so as to establish a nominal anchor and to avoid inflationary pressure. The program is centered around maintaining the adjusted monetary base broadly at its end-December 2002 level through mid-2003. Operationally, the authorities will seek to control the monetary base by acting on net domestic assets of the central bank and limiting sales of foreign exchange reserves for intervention, within the framework of a continued flexible exchange rate policy. The monetary program would be reviewed regularly and the authorities have committed to adopt corrective measures as necessary.
The fiscal program seeks to secure a consolidated cash primary surplus of about 2.5 percent of GDP in 2003. In order to reach the primary surplus target and for the fiscal gap to be consistent with the monetary program, a number of spending cuts, revenue measures and the elimination of certain tax exemptions will need to be approved by Congress by end-March 2003. Provincial adjustment is being achieved through spending controls and administrative reforms and is to be underpinned by the bilateral agreements for 2003 that are planned to be ratified by provincial legislatures by mid-May 2003.
The authorities intend to complement core monetary and fiscal policies with a number of structural measures aimed at paving the way to a more comprehensive approach under a successor program. The implementation of the initial strategy includes institutional and legal reforms to strengthen the framework for banking sector restructuring, including preliminary steps toward reform of public banks, revisions to prudential regulations, and measures to enhance the autonomy of the central bank. Other measures include tax reform aimed at broadening the tax base, and the reform of intergovernmental relations to encourage fiscal discipline in the provinces.
The Argentine authorities have committed to remain current on the government’s financial obligations to the IMF under the program.
Argentina joined the IMF on September 20, 1956. Its quota 1 is SDR 2.117 billion (about US$2.905 billion). Its outstanding use of IMF credit currently totals SDR 9.747 billion (about US$13,376 billion).
A member’s quota in the IMF determines, in parricular, the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs.