First quarter IMF review approved - what's next?
Last Wednesday, the IMF announced, as might have been expected, that the IMF and Argentina's authorities reached a staff level agreement in the country's first quarterly review (corresponding to 1Q22). Upon completion of the review (i.e., once the IMF board approves the review), Argentina should have access to the second disbursement of SDR 3.0bn (USD 4.03bn). The fact that Argentina met the objectives of its first review is not so surprising as the targets were finalized in late February. The Q1 review, therefore, included only one month of economic uncertainty.
Still, the awareness that the objectives for the coming quarters will be difficult to meet is reflected in the IMF press release, which clarified that the agreement was reached on an “updated macroeconomic framework” due to the external shock of the war in Ukraine. Although for the time being the annual objectives will remain unchanged, in particular regarding the three main objectives (the primary fiscal deficit, monetary financing, and net international reserves) the staff clarified that “a modification of the intra-year quarterly paths for the primary fiscal deficit and reserve accumulation is being proposed”. In short, the IMF might show some leniency in the second and third quarter targets. Yet, the question that remains is how Argentina will meet the annual targets if there is potential slippage in the coming quarters.
In this report, we will review the three main objectives to get a sense of what to expect over the coming quarters and its political impact.
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