June 13, 2018/IMF
Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement today on the Argentina government’s Letter of Intent and Memorandum of Economic Policies requesting a US$50 billion Stand-by Arrangement with the IMF:
“President Macri’s government today provided us with the details of their economic plan and their formal request for IMF support for this strong and ambitious effort through its Letter of Intent and Memorandum of Economic Policies. The authorities intend to publish these documents shortly.
“As I have said before, the policy plan underpinning the IMF’s financial assistance is owned and designed by the Argentine government, one aimed at strengthening the economy for the benefit of all Argentines.
“The economic targets are meaningful and there is a full articulation of the underlying policies that will help the government achieve its goals. It establishes ambitious medium-term fiscal goals for the federal government and establishes realistic inflation targets that will govern the conduct of monetary policy. These clear policy intentions will help bolster market confidence and address a range of long-standing vulnerabilities.
“The plan will also help reinforce Argentina’s institutional framework. For example, it has measures to improve the medium-term budget process and to ensure central bank independence. Importantly, it also discontinues the practice of providing central bank financing of the fiscal deficit, a critical step in the establishment of an independent central bank.
“I particularly welcomed the emphasis placed by President Macri’s economic team on supporting the most vulnerable in society. This is accomplished through concrete commitments to preserve the current level of social spending and increased resources for social assistance programs. There is also a pledge to work with other international agencies, like the World Bank and Inter-American Development Bank, to improve the overall design of Argentina’s social safety net.
“Further, I was heartened to see President Macri’s commitment to improving gender equity in Argentina through changes that correct discrimination in the tax system, steps to provide childcare support for working families, actions to promote equal pay for equal work, and measures to fight gender-based and domestic violence.
“With the clarity provided by the authorities’ letter, I judge that the negotiation with IMF staff have been completed satisfactorily and that this economic plan creates a solid basis for the US$50 billion Stand-By Arrangement announced last week as a staff-level agreement pending Executive Board approval (Press Release 18/229). The authorities’ have requested that one third of this support be disbursed upon approval of the program and that one-half of that amount (US$7.5 billion) would be made available for budget support.
“With the formal reassurances provided by the Argentine government, today we will issue the Staff Report to the IMF’s Executive Board, who will consider Argentina’s request formally on June 20. We look forward to helping strengthen the Argentine economy through this financing package.”