By Jorgelina do Rosario and Rodrigo Campos
(Reuters) -The International Monetary Fund and Argentina reached a staff-level agreement on the fourth review of their $44 billion program, the IMF said in a statement on Monday.
The IMF staff and Argentine authorities also requested IMF Board approval to revisions of reserve targets at the central bank, as the world’s biggest exporter of soymeal and soyoil is facing the worst drought in at least six decades, combined with a heat wave that has pummeled soy, corn and wheat crops.
“The bulk of the accommodation is requested to take place in early 2023, consistent with the front-loaded impact of the drought,” the IMF statement said.
The South American economy, which already has weak foreign exchange reserves amid capital and FX controls, is also the third-largest global exporter of corn.
“Temporary administrative FX measures should not be a substitute for sound macroeconomic policy,” the IMF said.
Argentina’s net reserves stood at around $4.2 billion at the end of February, according to calculations from Buenos Aires-based firm FMyA. The final talks to lower the reserves targets was first reported by Reuters.
The review is now pending board approval, after which some $5.3 billion would be made available to Argentina.
The current arrangement was worth $44 billion when it was agreed in early 2022 to replace a failed $57 billion program from 2018. Most of the cash would be used to pay the fund back.
Argentina surprisingly announced in January a debt buyback despite depleted hard currency reserves – a move that Moody’s considered a default, while S&P and Fitch did not.
A top IMF official later said the fund would “prefer not to have actions that undermine the reserve accumulation that we’re assuming in the program.”
(Reporting by Rodrigo Campos in New York and Jorgelina do Rosario in London; Editing by Alison Williams)