The report, which revealed problems with the loan, had been demanded by Alberto Fernández's government as part of negotiations with the IMF to refinance debts with the body

The IMF analyses the loan it granted to Argentina in 2018: "It did not meet the objectives"

photo_camera AFP/JIM WATSON - International Monetary Fund (IMF) logo at IMF headquarters in Washington, DC.

The International Monetary Fund (IMF) announced on Wednesday the publication of its technical assessment regarding the loan granted in 2018 to the Argentine government of Mauricio Macri. In the report, the banking authority recognises that the aid granted to Argentina failed to achieve the proposed objectives, which include "restoring the market, reducing external and fiscal imbalances, lowering inflation and protecting the most vulnerable," IMF representatives said.

This IMF support provided a loan of $56.3 billion, of which $44.2 billion has already been disbursed. This has brought the debt, applying interest rates, to $42.845 billion after a portion has been paid.

During 2018, the IMF approved "the largest stand-by arrangement in the history of the Fund", whose conclusions and analysis are included in their report, where they assure that "relevant Fund policies and procedures, including those related to financing, safeguards, and programme design, were complied with". However, despite complying with procedures, the programme "did not meet the objectives of restoring confidence in fiscal and external sustainability while promoting economic growth," the report states.

The Board noted that "the emphasis on government ownership may also have led to overly optimistic forecasts, weakening the programme's robustness", which, coupled with the fact that "the exchange rate continued to depreciate, increasing inflation and the peso value of public debt, and weakening real incomes, especially of the poor", caused the programme to fall short of its projected outcomes.

Mauricio MacriArgentine government position

Alberto Fernández requested the review as part of his negotiating strategy to refinance its debts with the IMF. The Argentine government's objective is to renegotiate the 2018 Stand By loan, which is impossible to repay under the country's current conditions, in order to orient it towards an Extended Facilities agreement, with repayment terms of up to 10 years.

Coinciding with the publication of the evaluation, Argentina paid the last payment for 2021, estimated at 1,892 million dollars, but not without managing to avoid the last minute conflicts in which the head of the Banco Nación, Claudio Lozano, requested that "the national state suspend all debt payments" with the IMF, until Congress analyses the legality and constitutionality of said indebtedness and deals with new agreements", whose request was dismissed by the national justice system.

El presidente de Argentina, Alberto Fernández

On the basis of the IMF's analysis, the government of Alberto Fernández requested that the causes of the "failure" of the agreement be examined in greater depth. "More self-criticism is needed, but the IMF recognised that in the first place, the money was used to pay debt to private creditors that was unsustainable - it was basically a 'bailout' for creditors - and also to finance the formation of foreign assets," said Economy Minister Martín Guzmán.

The president affirmed that the evaluation of the agreement "is a key step towards reaching an understanding", referring to the renegotiation process in which both organisations are involved.

Latin America Coordinator: José Antonio Sierra

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