Press Release: IMF Approves US$12.55 Billion Three-Year Stand-By Credit for Argentina
Press Release: IMF Approves US$12.55 Billion Three-Year Stand-By Credit for Argentina
Acuerdo Stand-by aprobado el 20/9/03
Program summary:
The Argentine authorities have prepared a three-year economic program aimed at establishing sustained growth, reducing widespread poverty and addressing a number of vulnerabilities-including from a massive debt overhang in the public and private sectors, an undercapitalized banking system stressed by crisis, and a weakened investment environment.
Growth and inflation: GDP growth is targeted to reach 5.5 percent in 2003 and stay at around 4 percent in 2004-06. Core inflation is expected to be maintained in single digits.
Fiscal policy will aim to raise the consolidated primary surplus from 2½ percent of GDP in 2003 to 3 percent in 2004. Beyond 2004, the authorities have committed to primary surpluses at levels sufficient to cover net payments on performing debt and obligations that may result under a debt restructuring agreement.
Structural fiscal reforms are envisaged to underpin the programmed fiscal consolidation and facilitate the phasing out of tax distortions. The reforms are sequenced to give time to build consensus. The authorities have committed to submit tax reform and intergovernmental reform legislation to Congress during 2004, with a view to their being introduced in the context of the 2005 budget.
Monetary policy will continue to aim at entrenching low inflation expectations, with base money growth driven mainly by the accumulation of international reserves. The authorities are considering moving to an inflation targeting regime by end-2004, and implementing supportive reforms aimed at increasing the autonomy of the central bank.
Banking reforms: The program aims at strengthening the soundness of the overall system and putting public banks on a sound financial footing. By end-2003, the authorities plan to eliminate temporary forbearance on the classification and provisioning of private loans and compensate banks for asymmetric pesoization and asymmetric indexation. As regards losses experienced by banks because of the legal injunctions (amparos), the authorities have committed to assess their impact and to identify measures to strengthen the system by end of 2003.
Debt restructuring: The authorities have also committed to advance negotiations with external creditors that is consistent with medium-term sustainability. They aim to conclude negotiations by mid-2004.
Utility companies, the authorities aim to obtain congressional approval by end-2003 of new legislation that delegates powers to the executive branch to renegotiate public concessions and effect interim tariff increases.
Predictable legal framework: the authorities will commit review the effectiveness of the insolvency system with a view to putting in place a legal and regulatory framework conducive to progress in private corporate debt restructuring.
Acuerdo Stand-by aprobado el 20/9/03
Program summary:
The Argentine authorities have prepared a three-year economic program aimed at establishing sustained growth, reducing widespread poverty and addressing a number of vulnerabilities-including from a massive debt overhang in the public and private sectors, an undercapitalized banking system stressed by crisis, and a weakened investment environment.
Growth and inflation: GDP growth is targeted to reach 5.5 percent in 2003 and stay at around 4 percent in 2004-06. Core inflation is expected to be maintained in single digits.
Fiscal policy will aim to raise the consolidated primary surplus from 2½ percent of GDP in 2003 to 3 percent in 2004. Beyond 2004, the authorities have committed to primary surpluses at levels sufficient to cover net payments on performing debt and obligations that may result under a debt restructuring agreement.
Structural fiscal reforms are envisaged to underpin the programmed fiscal consolidation and facilitate the phasing out of tax distortions. The reforms are sequenced to give time to build consensus. The authorities have committed to submit tax reform and intergovernmental reform legislation to Congress during 2004, with a view to their being introduced in the context of the 2005 budget.
Monetary policy will continue to aim at entrenching low inflation expectations, with base money growth driven mainly by the accumulation of international reserves. The authorities are considering moving to an inflation targeting regime by end-2004, and implementing supportive reforms aimed at increasing the autonomy of the central bank.
Banking reforms: The program aims at strengthening the soundness of the overall system and putting public banks on a sound financial footing. By end-2003, the authorities plan to eliminate temporary forbearance on the classification and provisioning of private loans and compensate banks for asymmetric pesoization and asymmetric indexation. As regards losses experienced by banks because of the legal injunctions (amparos), the authorities have committed to assess their impact and to identify measures to strengthen the system by end of 2003.
Debt restructuring: The authorities have also committed to advance negotiations with external creditors that is consistent with medium-term sustainability. They aim to conclude negotiations by mid-2004.
Utility companies, the authorities aim to obtain congressional approval by end-2003 of new legislation that delegates powers to the executive branch to renegotiate public concessions and effect interim tariff increases.
Predictable legal framework: the authorities will commit review the effectiveness of the insolvency system with a view to putting in place a legal and regulatory framework conducive to progress in private corporate debt restructuring.
posted by Pablo Presas at 11:48 p.m.
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