Argentina: Ex-post Evaluation of Exceptional Access under the 2022 Extended Fund Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Argentina

ARGENTINA EX-POST EVALUATION OF EXCEPTIONAL ACCESSUNDER THE 2022 EXTENDED FUND FACILITYARRANGEMENT—PRESS RELEASE; STAFF REPORT; ANDSTATEMENT BY THE EXECUTIVE DIRECTOR FORARGENTINA January 2025 IMF staff regularly produces papers covering multilateral issues and cross-countryanalysis. The following documents have been released and are included in thispackage: •APress Releasesummarizing the views of the Executive Board as expressed during itsJanuary 10, 2025,consideration of the staff report.•TheStaff Reportprepared by IMF staff and completed onDecember 19, 2024,for theExecutive Board’s consideration onJanuary 10, 2025.•Statements by the Executive DirectorsforArgentina. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202)623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Discusses the Ex-Post Evaluation ofArgentina’s Exceptional Access Under the 2022 ExtendedFund Facility FOR IMMEDIATE RELEASE Washington, DC–January 10, 2025:The Executive Board of the International MonetaryFund (IMF) met today to discuss the Ex-Post Evaluation (EPE) of Argentina’s exceptionalaccess under the 2022 extended arrangement under the Extended Fund Facility (2022 EFF),which expired at the end of 2024. As required in all cases of exceptional access (EA) to Fund financing, this EPE assesseswhether the macroeconomic strategy, program design, and financing under the 30-month EFFarrangement approved by the Executive Board in March 2022 (Press release No. 22/89) wereappropriate and in line with Fund policies. The report also includes an appendix with theauthorities’ reactions and views on the 2022 EFF. The 2022 EFF came about in extremely difficult circumstances. Argentina was unable toregain external viability under the 2018 Stand-By Arrangement andfaced large andconcentrated repurchase obligations to the Fund totaling about US$ 35 billion in 2022-23. Inaddition, the country was grappling with high inflation, a significant budget deficit, lowinternational reserves, and elevated public debt. The inability to meet obligations falling due tothe Fund could have led to severe and protracted consequencesfor Argentina, significantreputational implications to the Fund, and financial costs for the Fund and its members. The EPE report concludes that, reflecting this difficult context, as well as the challenging post-COVID conjunctureand the need to secure ownership by a reluctant government, the designof the 2022 EFF did not provide for an adjustment commensurate with the scale of Argentina’sfiscal and balance of payments (BoP) problems. The combination of a gradualist reformstrategy in a country with severely limited access to financial markets, large adverse shocks,and progressively weaker policy implementation resulted in outcomes in 2022-23 that fell wellshort of what was envisaged at the time of program approval. A major course correction subsequently undertaken by the Milei government—notably a sharpfiscal consolidation, an upfront devaluation, and an end to monetary financing of the budgethelped Argentina avert a full-blown crisis and make important strides toward macroeconomicstabilization. Overall, the 2022 EFF did not achieve its original macroeconomic objectives, but it wassuccessful in easing the burden of Argentina’s financial obligations to the Fund byrescheduling repayments over 2026-34, and may have helped Argentina avoid even worseoutcomes in 2022-23. The EPE report concludes that the experience with the 2022 EFF affirms many lessons fromprevious Argentina EPEs and warrants further reflection in several areas, including thesuitability of the Fund’s lending policy framework to deal with high and concentrated exposurecases as well as when resolution of a deeply entrenched BoP problem may not be feasible through a single Fund arrangement; the need for clearer commitments on specific contingencyplans when implementation risks are high; and the role that assessments of countries’capacity to repay should play in guiding the design of program safeguards, among others. Executive Board Assessment1 Executive Directors welcomed the comprehensive ex post evaluation (EPE) of Argentina’sexceptional access (EA) to Fund financing under the 2022 Extended Arrangement under theExtended Fund Facility (2022 EFF). Directors regretted that the 2022 EFF did not achieve its objectives. While recognizing that theprogram reflected difficult trade-offs in a highly complex setting—andthat the rescheduling ofArgentina’s repayment obligations to the Fund likely helped avoid potentially worseoutcomes—they agreed that program design did not provide for an adjustm