The International Monetary Fund (IMF) is set to discuss a new $20 billion loan for Argentina during an informal meeting next week, according to a report by Bloomberg News. The proposed loan would be in the form of a four-year extended fund facility totaling about 15 billion Special Drawing Rights.
A spokesperson for the IMF has declined to comment on the report, while the Argentine government has not yet responded to requests for comment from Reuters. However, Argentina’s lower house recently passed a decree in support of a new IMF program, paving the way for talks with the IMF to bolster central bank reserves and potentially lift capital controls.
The decree passed by the lower house did not specify the loan amount in dollars but outlined that the extended fund facility would have a repayment period of 10 years with a grace period of four years and six months. The new funds are expected to be used to pay off Treasury debt held by the central bank.
Argentina has been grappling with negative net foreign currency reserves due to years of overspending, currency crises, and regular defaults. The country is the IMF’s largest borrower, with a total of 22 loan programs to date. Argentina is still in the process of repaying a $44 billion deal from 2022.
IMF Spokesperson Julie Kozack stated during a news conference on March 6 that the IMF has been making progress towards a new program with Argentina and is working closely with the Argentine authorities. Once negotiations are finalized, the final loan arrangement will require approval from the IMF Executive Board.
It is important to note that the IMF’s procedures for “exceptional access,” which involve higher loan amounts exceeding a country’s normal borrowing limits, require additional involvement from the Executive Board. This includes consultations between IMF staff and the board before finalizing discussions on a program and announcing a proposed level of access.
Overall, the discussions surrounding the new $20 billion loan for Argentina are ongoing, and any final decision will be subject to approval from the IMF Executive Board. Stay tuned for updates on this developing story.
This article was reported by Rajveer Singh Pardesi in Bengaluru and edited by Marguerita Choy.
