Argentina awaits data before seeking to renegotiate IMF targets

Argentine officials are waiting until the end of the year to determine whether to renegotiate any terms of a US$20-billion agreement with the International Monetary Fund, including targets on foreign reserves, according to a person with direct knowledge of the matter.

While a report late Friday from newspaper La Nación cited the Central Bank governor as saying Argentina would seek to renegotiate reserve requirements, the person said no decision has been made yet.

The monetary authority missed the target to build up reserves during the first IMF staff review of the programme in July, and lack of hard currency has reinforced some investors’ concerns that its FX policy – letting the peso trade within a range – could prove unsustainable. 

According to La Nación, the government ruled out creating its own timeline for buying reserves outside the reserve targets set in the IMF programme. 

An IMF spokesperson pointed to comments during its last press briefing Thursday. Argentina’s Central Bank did not immediately respond to a request for comment Saturday morning.

In its last press briefing, the IMF urged Argentina to build up its foreign reserves faster as part of the nation’s US$20-billion agreement with the lender. Spokeswoman Julie Kozack said Thursday it was too early to say whether the country would achieve or miss the next target for reserve accumulation in its programme, which will be reviewed in January.

“In our discussion with the authorities, we have stressed the need to accelerate reserve accumulation efforts to help better manage volatility and to further strengthen market confidence,” Kozack said during the monthly press briefing.

Argentina doesn’t publish its net international reserves – the Central Bank’s total reserves minus its liabilities – but the figure stood at negative US$6.4 billion by the end of July, a shortfall of about US$2 billion from the original programme target, according to the most recent staff review. IMF staff projected in July that net reserves would be at negative US$2.6 billion by the end of the year.  

Since a record programme started in 2018, Argentine officials across different administrations and IMF staff have often reset targets during programme reviews, including after governments have missed targets. Renegotiating targets isn’t novel, but it comes as Wall Street investors urge the government to change its currency policy as the peso is seen by many as overvalued.  

Economy Minister Luis Caputo confirmed Wednesday his team plans to accumulate reserves, but he cautioned that the targets in Argentina’s IMF programme were agreed to before a menu of new financing options arose to cover the government’s US$4 billion of global bond payments due in January.

Argentina doesn’t expect to tap its separate US$20-billion currency swap line with the United States again this month, according to La Nación. Earlier this week, US Treasury Secretary Scott Bessent said the swap had been drawn on “a small amount.”