Argentina and the International Monetary Fund are going back to the drawing board on the country’s $44 billion program as a record drought is expected to push the country into recession, an Economy Ministry official said.
(Bloomberg) — Argentina and the International Monetary Fund are going back to the drawing board on the country’s $44 billion program as a record drought is expected to push the country into recession, an Economy Ministry official said.
All options are on the table in the fifth review of the IMF’s biggest program, including discussions on disbursements, said the official, who asked not to be named discussing private talks. An IMF spokeswoman didn’t immediately respond to a request for comment during weekend hours. The Economy Ministry declined to comment.
Economy Minister Sergio Massa discussed the economic impact of Argentina’s worst drought on record with IMF First Deputy Managing Director Gita Gopinath on Friday during the lender’s spring meetings. La Nacion newspaper reported the latest development earlier Saturday.
It’s another setback for Argentina’s program, less than two weeks after the IMF changed a key target for the third time since the deal began about a year ago. During the review, IMF staff and Argentine officials cut the level of net reserve accumulation, or cash stockpile, needed to be built up at the central bank this year to $2.6 billion from $4.8 billion.
The IMF’s executive board approved a $5.4 billion disbursement to Argentina two weeks ago after finishing its fourth review of the program, bringing disbursements under the extended fund facility to $28.9 billion.
As of April 3 when the IMF published its full report, officials kept the key primary fiscal deficit target for this year at 1.9% of gross domestic product. Achieving that target “remains essential” to the program, Gopinath said in a statement on April 1.
The IMF slashed its growth forecast for Argentina this week to 0.2% of GDP from 2% previously. Economists in Buenos Aires are projecting a 4% contraction.
Government data on Friday showed prices rose 104% in March from a year ago. Economists at JPMorgan Chase & Co. are forecasting 130% inflation by the end of the year.
The Inter-American Development Bank will help finance drought-affected Argentinian producers with about $1 billion by June, Massa told Bloomberg News in Washington on Saturday.
–With assistance from Maria Eloisa Capurro.
(Updates in second paragraph with aid disbursements under discussion.)
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