Argentina is considering how to persuade the International Monetary Fund to further ease the economic targets embedded in the country’s $44 billion IMF loan program, a source said, as a severe drought hits exports and threatens to push the economy into recession.
“All alternatives are on the table. Work will be done on the program,” said a source familiar with the IMF program and discussions between Argentina and the IMF. The source did not wish to be identified due to the sensitive nature of the talks and declined to provide further details.
The IMF already cut the level of foreign currency reserves the country needs at the end of this year by $1.8 billion. The IMF cited the drought’s impact on soybean and corn, Argentina’s main export products, and some analysts expect more easing will be needed.
IMF Deputy Managing Director Gita Gopinath said on Saturday she held a “good meeting” with Argentina’s Economy Minister Sergio Massa to discuss the program.
“We talked about the impact of the worst drought in Argentine history and we committed to continue working closely together to strengthen the program under this difficult scenario,” Gopinath said on Twitter.
Some analysts say that the economic targets baked into the program look overly optimistic, especially in light of Argentina’s deteriorating macroeconomic outlook.
The IMF projects annual inflation for 2023 at 60% compared to analysts’ forecasts of more than 100%.
In March, retail prices increased by 7.7%, above analyst expectations, as Argentina’s annual inflation rate soared to 104.3%.