IMF expects deal with Argentina in days, peso to weaken

BUENOS AIRES, July 23 (Reuters) – The International Monetary Fund (IMF) should in the coming days finalize the basis for a staff level agreement with Argentina over a review of the country’s $44 billion loan with the IMF, the Washington-based fund said on Sunday.

“The teams of the Economy Ministry and Central Bank of Argentina and the IMF staff have finished the core aspects of the technical work of the next review,” the IMF said on Twitter.

“The central objectives and parameters that will be the basis for a ‘staff level agreement’ have been agreed, which is expected to be finalized in the next few days before moving towards the review of the Argentina program,” it added.

The country is set to unveil tax and currency measures that will in effect devalue the peso as part of the deal, the Financial Times reported, adding that Buenos Aires will introduce a new preferential exchange rate for agricultural exports and levies on imports on Monday.

Argentina faces maturities with the IMF worth some $3.4 billion between July 31 and Aug. 1, at a time when the central bank’s net reserves are about $6.5 billion in the red.

The South American country is hoping to alter the economic goals it had agreed with the fund and bring forward some IMF disbursements scheduled for this year as it battles a severe financial crisis which a lack of reserves could exacerbate.

An Economy Ministry source told Reuters the disbursement program for the second half of 2023 has already closed and that the staff level accord could be sealed on Wednesday or Thursday.

Argentina, which is also struggling with high inflation and a significant fiscal deficit, has suffered a considerable hit to its foreign currency income due to a severe drought which crimped its principal source of exports, agriculture.

The IMF said the agreement seeks to consolidate “fiscal order and strengthen reserves,” acknowledging the impact of the drought, as well as the damage to exports and tax revenues.

Reporting by Hernan Nessi, Editing by Nick Zieminski and Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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