New Arrangement with the IMF and New Exchange Rate Framework

Extended Facilities Arrangement 2025

The International Monetary Fund (IMF) approved an Extended Facilities Arrangement for a period of 48 months, totaling USD 20 billion. The arrangement includes:

1.    An immediate disbursement of USD 12 billion.

2.    An additional disbursement of USD 2 billion, subject to a scheduled review in June 2025.

The arrangement with the IMF is part of a program that foresees other multilateral and bilateral organizations increasing their financing by an additional USD 8 billion (USD 6 billion from multilateral organizations and USD 2 billion through the extension of the repo arrangement signed with international banks in January 2025).

Argentina is expected to gradually return to international capital markets.

Additionally, a new 12-month extension of the currency swap with the Central Bank of China will be added, amounting to approximately USD 5 billion.
 

Objectives of the Economic Program

The arrangement with the IMF is part of a new phase of the economic stabilization plan led by the current administration, aimed at:

1.    Maintaining a sustained fiscal surplus (the “zero deficit” policy).

2.    Consolidating the disinflation process, with a freeze on monetary issuance.

3.    Strengthening international reserves.

4.    Moving towards a more flexible exchange rate regime.

5.    Promoting structural reforms for a more dynamic market economy.

The planned structural reforms aim at:

1.    Implementing a labor reform focused on greater flexibility.

2.    Strengthening market openness through a gradual liberalization of trade.

3.    Improving State efficiency and regulatory predictability.

4.    Promoting governance and transparency, which includes aligning Argentina with international standards in anti-corruption and anti-money laundering measures.

Modifications to the Exchange Rate Regime

Simultaneously with the approval of the Extended Facilities Arrangement with the IMF, the federal government announced a new exchange rate scheme with the following guidelines:

1.    The exchange rate will fluctuate within a moving band, between ARS 1,000 and ARS 1,400.

o    The upper limit of the band will adjust at a rate of +1% per month.

o    The lower limit will adjust at a rate of -1% per month.

2.    The exchange rate will float freely within the bands, without intervention from the Argentine Central Bank (BCRA), except in two cases:

o    To buy USD to accumulate reserves.

o    To sell USD in the event of excessive volatility.

In no case will the interventions be sterilized with other actions.

3.    If the exchange rate reaches the lower band, the BCRA will buy USD to maintain its value and accumulate reserves.

4.    If it reaches the upper band, the BCRA will sell USD and use the resulting ARS to reduce monetary liabilities.

Exchange Rate Flexibility Measures

The foreign exchange market will be partially liberalized with the following measures:

1.    The so-called “blend” USD will be eliminated. This Blend USD allowed exporters to liquidate 80% of their export proceeds in the foreign exchange market, and the remaining 20% through the purchase and sale of securities.

2.    Restrictions for individuals to operate in the foreign exchange market will be eliminated, along with the elimination of the tax perception for purchasing foreign currency (except for tourism and credit card payments for overseas consumption).

3.    Paying profits and dividends to foreign shareholders will be allowed starting with financial years beginning in 2025 (i.e., dividends can be paid starting in 2026).

4.    Payment terms for foreign trade transactions will be relaxed: 

a.    The 30-day waiting period after customs clearance of goods will be eliminated.

b.    The waiting period from the provision of services will be eliminated for their payment.

c.    Payments to related companies for services will be allowed starting 90 days after service provision.

d.    Small and medium-sized enterprises will be able to pay from the dispatch of goods at the port of origin.

e.    Payment terms for the import of capital goods will be relaxed, allowing now for 30% in advance.

Lastly, the BCRA will work on a new issuance of Bonds for the Reconstruction of a Free Argentina (BOPREAL) as a mechanism to address the payment of existing debts in the Argentine private sector for due dividends and indebtedness with related entities corresponding to previous fiscal years.