IV Revision FMI Sobre Argentina

IMF Country Report No.
19/232
ARGENTINA
FOURTH REVIEW UNDER THE STAND-BY
July 2019 ARRANGEMENT, REQUEST FOR WAIVERS OF
APPLICABILITY AND MODIFICATION OF
PERFORMANCE CRITERIA, AND FINANCING
ASSURANCES REVIEW—PRESS RELEASE; STAFF
REPORT; AND STAFF SUPPLEMENT
In the context of the Fourth Review under the Stand-By Arrangement, the following
documents have been released and are included in this package:
• A Press Release including a statement by the Chair of the Executive Board.
• The Staff Report prepared by a staff team of the IMF for the Executive Board’s
consideration on July 12, 2019, following discussions with the officials of Argentina on
economic developments and policies underpinning the Stand-By Arrangement. Based
on information available at the time of these discussions, the staff report was
completed on July 3, 2019.
• A Staff Supplement updating information on recent developments.
The documents listed below have been or will be separately released.

Letter of Intent sent to the IMF by the authorities of Argentina*
Memorandum of Economic and Financial Policies by the authorities of Argentina*
Technical Memorandum of Understanding*
Supplement to the Letter of Intent*
*Also included in Staff Report
The IMF’s transparency policy allows for the deletion of market-sensitive information and
premature disclosure of the authorities’ policy intentions in published staff reports and
other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623-7430 • Fax: (202) 623-7201
E-mail: publications@imf.org Web: http://www.imf.org
Price: $18.00 per printed copy
International Monetary Fund

Washington, D.C.
© 2019 International Monetary Fund

Press Release No. 19/268 International Monetary Fund
Washington, D.C. 20431 USA
FOR IMMEDIATE RELEASE
July 12, 2019
IMF Executive Board Completes Fourth Review Under Argentina’s Stand-By

Arrangement, Approves US$5.4 Billion Disbursement
The Executive Board of the International Monetary Fund (IMF) completed today the fourth
review of Argentina’s economic performance under the 36-month Stand-By Arrangement
(SBA) that was approved on June 20, 2018. The completion of the review allows the
authorities to draw SDR 3.9 billion (about US$5.4 billion), bringing total disbursements
since June 2018 to SDR 31.91371 (about US$44.1 billion).
Following the Executive Board discussion of Argentina’s economic plan, Mr. David Lipton,
the IMF’s Acting Managing Director and Chair, stated:
“The Argentine authorities continue to show a strong commitment to their economic policy
program, meeting all the applicable targets under the Fund-supported program. While it has
taken time, these policy efforts are starting to bear fruit. Financial markets have stabilized,
the fiscal and external positions are improving, and the economy is beginning a gradual
recovery from last year’s recession. The Fund is strongly supportive of these important
policy efforts.
“Although inflation is still high, it is now on a downward path that is expected to continue in
the coming months. The BCRA’s prudent management of monetary policy remains an
essential anchor for both the exchange rate and the disinflation process.
“The Argentine government has consistently demonstrated its commitment to fiscal

discipline and has well-exceeded its fiscal targets for March and June. The authorities have
asked the IMF to support raising the end-September primary balance target as a signal of
their priority of ensuring that Argentina’s debt-to-GDP ratio is placed decisively on a
downward path.
“The government was able to meet its fiscal targets while also protecting social programs and
using fiscal tools to shield the most vulnerable from the effects of the recession. The
authorities have also requested the IMF to support an expansion of the social spending floor
to incorporate assistance programs targeted at adults without children and low-income
working mothers. These commendable efforts will both expand coverage of the social safety
net and help improve gender equity.
“The authorities’ efforts to increase rollover rates on public debt and to lengthen the maturity
of new debt issuance should help mitigate financing risks in the period ahead. Ongoing
efforts to improve the functioning of local sovereign debt markets will help improve market
liquidity and lower financing costs.
“Steadfast implementation of the policies underlying the IMF-supported program will be

critical for continued progress. As macroeconomic stability becomes more entrenched, policy
efforts will need to focus more on reinvigorating plans for structural reforms. The recent
MERCOSUR-EU trade agreement is an important step in that direction. Further efforts are
needed to redesign the tax system; increase competition in domestic product markets; and
deepen efforts to strengthen governance and confront corruption. Such reforms have
significant potential to raise Argentina’s growth potential, create jobs, reduce poverty, and
improve the standard of living for all Argentineans.”
ARGENTINA
FOURTH REVIEW UNDER THE STAND-BY
July 3, 2019 ARRANGEMENT, AND REQUEST FOR WAIVERS OF
APPLICABILITY AND MODIFICATION OF PERFORMANCE
CRITERIA, AND FINANCING ASSURANCES REVIEW
Context. Financial markets stabilized in May and June after a period of turmoil in late
April prompted by political uncertainties and a significant increase in inflation and
inflation expectations. High interest rates, seasonal dollar inflows from the agricultural
sector, greater clarity on the candidates in the October election, and the
BCRA’s announcement that it may intervene to support the peso in the event of
disorderly market conditions have helped better anchor the exchange rate. Modest
exchange rate appreciation and continued fiscal and monetary policy restraint have
supported a decline in monthly inflation in April and May. In addition, the fiscal position
has been helped by higher-than-expected inflation (boosting nominal tax revenues) and
a cautious approach to spending. Economic activity weakened further in Q1, but the
recession is likely to have ended, with sequential growth expected to be positive in the
coming quarters. Sovereign spreads remain high and, while rollover rates for federal
government liabilities have been in line with program assumptions, average debt
maturities have shortened, increasing gross financing needs in the months leading up
to the election.
Program performance. End-June performance criteria for net international reserves,
base money, and non-deliverable forwards have been met. Fiscal performance criteria
for end-March were met and are on track to be complied with in June (although waivers
of applicability are being requested due to data unavailability). All other end-March
program performance criteria were met. The government also implemented the
end-June structural benchmark on designing a compliance improvement plan and risk
mitigation strategies for the tax administration.
Focus of review. With very high inflation and an increase in gross financing needs in
the coming months, discussions centered on how best to mitigate risks to the program,
bolster market confidence, and calibrate monetary policy to continue bringing down
inflation. The authorities have revamped their debt management strategy to support
higher rollovers and an extension of average maturity of new issuance to the degree
permitted by market conditions. The authorities have maintained a cautious approach
to expenditure authorization in order to safeguard their program’s fiscal targets. The
central bank has recalibrated the parameters of the monetary program to
accommodate an increased seasonal demand for currency in July but to quickly unwind
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that seasonal adjustment in the subsequent months in order to maintain interest rates
at a level sufficient to steadily lower month-on-month inflation rates. Finally, the
authorities have taken steps to strengthen social outcomes by improving the coverage
of social assistance programs for adults without children, and by providing more
resources to support gender equity.
Risks ahead. Risks to the program are elevated, with the most challenging election
period still ahead. The potential risks to the program were clearly demonstrated in the
market volatility that occurred in April. Gross financing needs are high and a wavering in
market confidence can quickly translate into higher sovereign spreads, difficulty
meeting fiscal financing needs, a shift in investor preferences away from peso assets,
and pressures on the exchange rate (which directly feed back into the debt dynamics
given the large share of the debt in foreign currency). In the coming months, these risks
may potentially be exacerbated by market reactions to the political uncertainties
associated with the upcoming elections, notwithstanding publicly announced support
for the broad objectives of the program by the main opposition presidential candidates.
Furthermore, the shortening of maturities over the past few months have added to the
financing needs in the months immediately before the elections. It will, therefore, be
important to take every opportunity to extend debt maturities, raise debt rollover rates,
and build cash buffers to lessen these risks. More broadly, a continued steadfast
commitment to the government’s policy plan as well as clear communication remain
the best strategy to maintain both market confidence and societal support for the
program as the election approaches.
2 INTERNATIONAL MONETARY FUND

ARGENTINA
Approved By A mission team visited Buenos Aires from May 11-22, 2019. The
Nigel Chalk (WHD) team consists of R. Cardarelli (head), C. Jones, D. Plotnikov,
and Martin Mühleisen M. Shamloo, J. Wong, J Yepez (all WHD), F. Amui, T. Alleyne (both
(SPR) resident representative office), M. Candia (COM), V. Crispolti,
R. Monteiro (FAD), F. Figueroa (LEG), J. Menkulasi (SPR), and
R. Veyrune (MCM). The mission was aided by A. Aghababyan,
A. Diaz, and J. Sarmiento-Monroy. Mr. Lopetegui (Executive Director)
participated in most meetings.
CONTENTS
RECENT DEVELOPMENTS _______________________________________________________________________ 5
OUTLOOK AND RISKS _________________________________________________________________________ 11
PROGRAM IMPLEMENTATION _______________________________________________________________ 12
MAINTAINING FISCAL DISCIPLINE ___________________________________________________________ 12
MONETARY AND EXCHANGE RATE POLICIES ________________________________________________ 15
DEBT MANAGEMENT__________________________________________________________________________ 16
BOOSTING GROWTH __________________________________________________________________________ 16
TACKLING CORRUPTION ______________________________________________________________________ 18
PROGRAM ISSUES _____________________________________________________________________________ 18
EXCEPTIONAL ACCESS CRITERIA _____________________________________________________________ 20
STAFF APPRAISAL _____________________________________________________________________________ 22
INTERNATIONAL MONETARY FUND 3

ARGENTINA
BOX
1. The Transmission of Short-Term Interest Rates to Rates on Bank Time Deposit ________________ 7
FIGURES
1. Recent Market Developments _________________________________________________________________ 24
2. Real Sector ____________________________________________________________________________________ 25
3. FX and Monetary Developments ______________________________________________________________ 26
4. Fiscal and Financing ___________________________________________________________________________ 27
5. External Sector ________________________________________________________________________________ 28
6. External Debt Sustainability: Bound Tests _____________________________________________________ 44
TABLES
1. Selected Economic and Financial Indicators ___________________________________________________ 29
2. Summary Balance of Payments ________________________________________________________________ 30
3. Consolidated Public Sector Operations ________________________________________________________ 31
4. Federal Government Operations ______________________________________________________________ 32
5a. Summary Operations of the Central Bank ____________________________________________________ 33
5b. Summary Operations of the Banking Sector _________________________________________________ 34
5c. Summary Operations of the Central Bank (Monthly 2019)____________________________________ 35
5d. Summary Operations of the Central Bank (Monthly 2020) ___________________________________ 35
6. External Debt __________________________________________________________________________________ 36
7. Public Debt ____________________________________________________________________________________ 36
8. Federal Government Gross Financing Needs and Sources (US$mn) ___________________________ 37
9. External Gross Financing Needs and Sources (US$mn) ________________________________________ 38
10. Schedule of Reviews and Purchases __________________________________________________________ 39
11. Quantitative Performance Criteria and Indicative Targets ____________________________________ 40
12. Structural Program Conditionality ____________________________________________________________ 41
13. Indicators of Fund Credit _____________________________________________________________________ 42
14. External Debt Sustainability Framework ______________________________________________________ 43
ANNEX
I. Public Debt Sustainability Analysis _____________________________________________________________ 45
APPENDIX
I. Letter of Intent _________________________________________________________________________________ 54
Attachment I. Memorandum of Economic and Financial Policies (Update) _________________ 56
Attachment II. Technical Memorandum of Understanding _________________________________ 65

ARGENTINA
RECENT DEVELOPMENTS
1. After a sell-off of Argentine assets in April, financial markets improved in May and
June, albeit with higher sovereign spreads than at the time of the third review. Higher-than-
expected March inflation and increased political uncertainty led to a sharp sell-off in Argentine
assets in the last week of April. Sovereign spreads rose to more than 1000bps and the 1-year
CDS peaked at 1850 bps. However, the sale of dollars from commodity exporters, changes to the
monetary policy and FX intervention framework, and a shifting assessment of election-related risks
contributed to calmer market sentiment in May and June. Since the peak of the sell-off in April, the
peso has appreciated by around 8 percent against the U.S. dollar, the stock market has rebounded,
sovereign spreads fell (but remain high, with the EMBIG now around 850 bps), and the state-owned
oil and gas company successfully issued a 10-year global bond. It is notable that the difference
between 1-year and 5-year CDS spreads has narrowed significantly, indicating a lower assessment of
near-term risks. Private-sector rollover rates have rebounded again in May and June after suffering
in April. Argentina’s 2021 U.S. dollar bond yield has compressed by 350 basis points since the all-
time high reached on June 3. While the market volatility has to a large extent dissipated it has,
nonetheless, left a more lasting legacy with the average maturity of public debt having shortened
and gross financing needs in the coming months higher than forecast at the time of the third review.
2. The political coalitions and presidential candidates for the October 2019 general
elections were announced in June. President Macri chose Miguel Pichetto (co-founder of
Alternativa Federal) as vice-presidential candidate to form the umbrella of Juntos por el Cambio.
Former president Cristina Fernández de Kirchner announced that she would run in the upcoming
elections as a vice presidential candidate to Alberto Fernández, a former chief of staff to President
Neston Kirchner in 2003-2008. Alberto Fernández will lead an electoral list (Frente de Todos) that
includes Sergio Massa, another co-founder of Alternativa Federal. Finally, Roberto Lavagna will run
as the candidate for Consenso Federal 2030, with Juan Urtubey as his vice president.
3. Inflation has fallen but remains high.

Inflation peaked at 4.7 percent m/m in March
driven by a weaker peso, continued increases in
regulated prices, and the recovery in nominal
incomes boosting consumer demand.
Subsequently, there has been a broad-based fall in
inflation to 3.1 percent m/m in May due to a freeze
in planned increases in utility tariffs (regulated
prices still had a small, but positive contribution of
0.8pp, reflecting mostly an increase in water and
gas tariffs), a tight monetary policy stance, and
lower volatility in the nominal exchange rate. These
factors also contributed to a better anchoring of expectations and a reduction in core inflation from
4.6 percent in March to 3.2 percent in May.). The staff’s diffusion index declined since March,
suggesting that disinflation might be broadening. Despite declining monthly inflation, the

ARGENTINA
cumulated annual inflation in May reached a new high of 57.3 percent y/y and inflation expectations
for end-2019 have risen to 40.3 percent (although 12-month ahead inflation expectations fell in
May, for the first time since January).
4. The contraction in economic activity moderated in the first quarter of 2019. Lower
household real income (due to higher-than-expected inflation and a deterioration in labor market
conditions) has weighed on private consumption. At the same time, uncertainty associated with the
economy and the elections, as well as tighter monetary and financial conditions, have taken a toll on
investment. On the supply side, a contraction in services was partly offset by growth in agriculture,
construction, and manufacturing. Monthly indicators suggest sequential quarter-on-quarter growth
is likely to turn positive in the second quarter.
5. Poverty increased in the second half of 2018. Despite the authorities’ efforts to expand
coverage and increase social assistance benefits, the share of the population living in poverty rose to
32 percent in 2018H2 up from 27 percent in 2018H1. The share of the population living in extreme
poverty also rose, to nearly 7 percent from about 5 percent in 2018H1. Due to these increases,
according to a study by the Catholic University, nearly 52 percent of children and teens were living
in poverty in 2018 (up from 44 percent in 2017) although healthcare coverage for children has
improved.
6. Despite still high real interest rates, there has been an erosion in the demand for peso
deposits since December. Following the financial
turmoil at end-April, LELIQ (7-day) rates peaked in
early May (at 74.1 percent). However, as market
volatility subsided, short-term rates have fallen (by
almost 1200 bps in June) and measures introduced in
April to strengthen bank competition 1 have helped
increase the pass-through of money market rates to
deposit rates (Box 1). Nonetheless, concerns about
currency depreciation have led to a real reduction in
private sector peso deposits since the beginning of
the year. Dollar deposit growth, however, remains
stable.
7. Bank credit to the private sector continues to shrink. The stock of credit to the private
sector contracted in April by over 30 percent in real terms relative to a year ago, with a 40 percent
real reduction in loans to corporations which contributed to the slump in investment and growth.
Credit quality, particularly for revolving credit to households, is worsening with nonperforming loans
at 4.2 percent at end April. Bank profitability remains healthy for the sector as a whole (ROE of
1 On April 5th, the BCRA announced the launch of a product allowing depositors to make time deposits at the bank
that offers the best interest rate, whether or not they are a client of the bank. Banks needed to adopt the necessary IT
changes to implement the product by end April.

ARGENTINA
39 percent, and ROA of 4 percent), although public banks registered losses in April. Banks remain
well capitalized (Tier 1 capital for the sector is 13.9 percent compared to 14.1 percent a year ago).
Box 1. The Transmission of Short-Term Interest Rates to Rates on Bank Time Deposits
Banks are assumed to set their 30-day deposit rate as a fixed mark-up over the compounded short-term
(7-day LELIQ) rate expected for the coming month, taking into account that they face an average 17 percent
unremunerated reserve requirement on deposits.1 The spread between deposit (𝑟𝑟𝑡𝑡𝑑𝑑 ) and LELIQ rates (𝑟𝑟𝑡𝑡𝐿𝐿 ) can
be expressed as:
𝐿𝐿
𝑟𝑟𝑡𝑡𝑑𝑑 − 𝑟𝑟𝑡𝑡𝐿𝐿 = 𝛼𝛼 + 𝛽𝛽(1 − 𝑢𝑢𝑢𝑢𝑢𝑢)E𝑡𝑡 𝑟𝑟𝑡𝑡+30 − 𝑟𝑟𝑡𝑡𝐿𝐿 + 𝑒𝑒′𝑡𝑡
Where urr is the average unremunerated reserve requirement and E𝑡𝑡 𝑟𝑟𝑡𝑡+30
𝐿𝐿
is the compounded LELIQ rate
expected for the following 30 days.
Spread between LELIQ and BADLAR rates Spread between LELIQ and BADLAR rates
(Percent) (Percent)
80 30 30
LELIQ - BADLAR rates (RHS) LELIQ rate
Data
70 25 25
Fitted
60 20 20
50 15 15
40 10 10
30 5 5
20 0
0
Oct-18
May-19
Nov-18
Jun-19
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Oct-18
May-19
Nov-18
Jun-19
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Source: Bloomberg. Sources: BCRA and IMF staff calculations.
An estimated model (based on data until end-May) — where changes in deposit rates depend on changes in
LELIQ expectations (formed in a backward-looking manner), as well as the volatility of LELIQ rates in April —
fits well the actual behavior of the spread between time deposit and LELIQ rates. Using that model, out-of-
sample forecasts for June indicate that the spread is reacting with the normal lags to the changes in the
LELIQ rate. As such, while there are normal lags in the pass-through from short-term rates to time deposit
rates (of around 10 days for 50 percent pass through), the current transmission of monetary policy is
behaving as it has done since the BCRA shifted to a base money targeting framework.
Furthermore, the empirical analysis indicates that recent measures introduced to improve competition
among banks have led to an increase in deposit rates by about 3.4 percentage points (based on introducing
a dummy in the estimated model for the period after the competition measures were introduced).
1
Time deposits are also subject to a 5 percent reserve requirement that can be met by holding BOTES and a further
13 percent met by holding LELIQs.
8. The BCRA distributed a dividend of AR$77 billion to the Treasury in May (largely from
realized gains from FX sales in 2018). This dividend continues to be held in Treasury FX deposits
at the central bank and so did not have an impact on monetary conditions or FX reserves. On
June 21st, the Treasury sold US$400 million to the BCRA in a cash management operation to meet
peso fiscal needs (which the BCRA fully sterilized). In April, Treasury began daily FX sales of

ARGENTINA
US$60 million, to convert IMF financial support into pesos in line with its projected peso needs for
the next few months.
9. The BCRA has responded to higher inflation and market volatility by adapting its
FX intervention strategy. On April 16th the BCRA reduced the monthly rate of change of the
reference zone from 1.75 to zero percent and committed not to buy FX in the event the currency
appreciates, undertaking unsterilized FX sales only if the currency depreciates above AR$51.5 per
US$. The increased prospects for a stronger peso would, in turn, support the central bank’s
disinflation efforts. The BCRA also introduced a floor of 62.5 percent on LELIQ rates which was
maintained in May and June. Finally, on April 29th the BCRA indicated a willingness to sell FX in the
event of disorderly market conditions such that:
• If the exchange rate is below AR$51.5 per US$ the BCRA would be prepared to sell dollars in an
amount and manner that would depend on market dynamics.
• If the exchange rate is above AR$51.5 per US$: the BCRA would be prepared to sell up to
US$250 million (an increase from the previously announced US$150 daily limit) and may
undertake additional interventions to counteract episodes of excessive volatility.
All FX sales would be unsterilized which would lead to a reduction in the monetary base, further
tightening the monetary stance. After that announcement, the peso appreciated by 3.5 percent, was
broadly stable in May, and appreciated 5½ percent in June (despite forward interventions by the
BCRA to moderate the pace of appreciation), also thanks to high interest rates, the seasonal dollar
inflows from the agricultural sector, and greater clarity on the candidates in the October election.
10. In late June and early July, the BCRA also introduced changes to its reserve
requirement regime. The changes aimed at helping liquidity planning by the banks, and at
accommodating for the seasonal increase in the demand for currency in circulation:
• The reserve requirements for each month will be based on the average level of deposit of the
previous month.
• The reserve requirement in July-August and December-January will be computed based on the
average of deposits of the previous two months to offset the seasonality experienced in those
months.
• Banks will exclude from the calculation of their reserve requirement the deposits that are held to
pay retailers for purchases made with credit and debit cards (to incentivize payment by credit
and debit cards).
• To accommodate the seasonal increase in demand for currency in circulation (CiC) in July, the
unremunerated reserve requirements (URR) on time deposits was reduced by 3 percent on
July 1. The base money targets in August-October will be lowered to unwind this temporary
seasonal effect, so that the target in October will be the current one less the estimated injection
of liquidity from the lower URR in July (about AR$45 billion). To avoid that this change will result

ARGENTINA
in looser monetary conditions, the authorities have announced that they will maintain a floor on
the LELIQ rate of 58 percent until end-July (which should allow the real ex-ante interest rate to
remain at levels close to its end-June level).
11. During March-May, the authorities’ introduced a series of policies to support the
economy:
• Freezing utility tariffs for the rest of 2019. Scheduled increases in electricity tariffs in May and
August were canceled and the government committed to no further gas tariff increases in 2019.
• Measures to contain price increases for basic products for the vulnerable. The precios cuidados
program (a voluntary agreement between the government and producers/retailers) was
expanded to cover 60 basic foods items (prices for those goods will remain unchanged from
April-October, in addition to the existing agreements that covered 580 products). Discounts
were agreed with meat wholesalers on certain cuts of beef. Providers of pre-paid cell phone
plans agreed to freeze their rates until September.
• Discounts and subsidized loans. Pensioners and beneficiaries of social transfers were offered by
retailers discounts on groceries, clothing, home appliances and certain other purchases.
Households receiving the universal child allowance will be eligible for discounts on certain
medicines. In addition, the government will expand a subsidized loan program for buying a first
home and pensioners and recipients of the universal child allowance will be eligible for low-cost
loans (that are repaid out of future pensions and allowances). Lastly, the government announced
subsidies to the purchase of cars.
• Measures to support SMEs include more favorable payment plans for tax debt, regulatory
improvements for banking services, and the elimination of export taxes for companies that are
exporting more in 2019 than in 2018 (and which export less than US$50 million per year).
• Interest-free payment plans for consumer goods. The interest rates on payment plans (ranging
from 3 to 18 months) for purchases of many durable goods has been reduced to zero. The cost
of this measure (the Ahora 12 program) will be absorbed by banks and retailers, with banks
reducing interest rates from 40 to 20 percent and participating retailers absorbing the remaining
cost.
To cover the cost of these measures, the authorities have (i) re-instated the imposition of the double
VAT rate for imports (that is fully creditable against sales) and (ii) increased the “statistical” tax on
imports (from an effective rate of 0.14 percent to 2.3 percent) while also removing several
exemptions, including for imports from MERCOSUR countries. Moreover, the authorities have
intensified their efforts to improve revenue collections.
12. On June 28, Mercosur reached a free-trade agreement with the EU establishing a
framework to negotiate tariff and non-tariff barriers for specific products. The agricultural
sector (63 percent of Argentina exports to the EU) will be the main beneficiary of the agreement in
Argentina. The EU has offered a full and immediate liberalization for 80 percent of Argentina
industrial exports to the EU (primarily those produced by small and medium enterprises). The

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agreement also simplifies and eliminates several import compliance regulations, thereby reducing
non-tariff barriers for Argentina exporters. In return, Mercosur agreed to gradually remove tariff
barriers for EU exports (for the EU priorities are industrial exports, especially cars, and wine and
cheese) over the next 10-15 years. The EU also aims to compete in public tenders and increased
market access, potentially incentivizing FDI into Argentina.
Cumulative Primary Balance Q1

13. The primary federal fiscal balance remained in (percent of GDP) Revenues
surplus up to May. The primary federal balance from 6%

Current Spending
Capital Spending 0.3%
January-May totaled 0.2 percent of GDP, compared to -0.3

Primary Balance (RHS)
4% 0.2%
percent of GDP during the same period in 2018. Tax 2% 0.1%
revenues have been partly boosted by higher-than- 0% 0.0%
projected inflation and export tax receipts recovered -2% -0.1%
somewhat in May. Primary expenditures fell by 0.7 percent -4% -0.2%
of GDP when compared to the first five months of 2018, -6% -0.3%
driven by broad-based reductions across all expenditure 2018 2019
categories (except for energy subsidies).

Sources: IMF staff calculations and estimates.
14. On average, domestic rollovers in Q2 have Total Debt Issuances

450% 5,000
remained above program forecasts although the FX (US$mn, rhs)
400% AR$ (US$mn, rhs)
average maturity of the federal debt has shortened. 350% Overall Rollover Rate 4,000
Since the third review, rollover rates for privately-held 300%

3,000
debt have remained above program assumptions. 250%
200%
However, new debt has been issued at short maturities 150%
2,000
and at higher yields, increasing financing needs for the 100% 1,000
next several months. To smooth out a US$2 billion 50%
AR$ denominated dual-currency bond (DUO) maturing in 0%

Sep Oct Nov Dec Jan Feb Mar Apr May Jun
-
June, the authorities exchanged US$1 billion of the Sources: BCRA and IMF staff estimates
issuance for new FX-linked bonds (amortizing in August,

September, and October, and November) and rolled the remaining into either FX or interest rate
linked bonds.
15. The trade surplus in the first four months of 2019 was US$4.5 billion (compared to a
deficit of the same magnitude in the same
Merchandise trade,
period last year). The shift in the trade balance (Millions of U.S. dollars, SA)
1,500 7,000
was driven by falling imports (down 29 percent in
6,000
the first 5 months of 2019 relative to the same 1,000
5,000
period last year). Exports have responded little to 500
4,000
last year’s depreciation in the real exchange rate 0
3,000
(stronger commodity exports have been offset by -500
2,000
lower overseas sales of manufacturing goods). -1,000
Trade Balance (rhs)
1,000
Exports
Private sector capital outflows persisted in the first -1,500 Imports 0
five months of the year but are 30 percent lower
May-16
Sep-16
May-17
May-19
Nov-16
Jul-16
Mar-17
Jan-17
Jul-17
Jul-18
Mar-18
Mar-19
Jan-18
Jan-19
Sep-17
May-18
Sep-18
Nov-17
Nov-18
than in the same period in 2018. The current

Sources: BCRA and IMF staff calculations.

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account deficit fell to 3.4 percent of GDP in the 12 months ending in 2019Q1 (from 5.9 percent of
GDP in 2018Q3). The real exchange rate appreciated 13 percent between end-September and
end-May (for 2018 as a whole the peso is judged to be around 10 percent weaker than the level
consistent with medium-term fundamentals and desired policies, in line with the end-2018 EBA
assessment (although this estimate is subject to significant uncertainty).
OUTLOOK AND RISKS

16. The 2019-20 growth forecast has been revised down. The revision in 2019 (to
- 1.3 percent) reflects the weak growth outturn (especially in domestic demand and imports) in the
first quarter and downward growth revisions to regional trading partners (Brazil in particular). The
recovery of agricultural production and a gradual rebuilding of salaries’ real purchasing power after
the sharp compression last year should help support a return to positive sequential growth
beginning in the second quarter. However, with inflation proving to be more persistent, real interest
rates will need to remain higher for longer, again affecting domestic demand and imports and
resulting in a downward revision to growth in 2020 (from 2.2 to 1.1 percent). The higher interest
rates and lower growth have contributed to raising the medium-term debt levels to exactly
60 percent of GDP by 2024.
17. Inflation is expected to end the year at around 40 percent (well above the 30.5 percent
forecast at the time of the third review) due to rising nominal wages and a significant increase
in inflation expectations. Higher taxes on imports are expected to more-than-offset the
inflationary impact of the freeze on utility tariffs and the expansion of the precios cuidados program.
As a result, the end-year inflation has been revised up from 30.5 percent at the time of the Third
Review Nonetheless, continued monetary and fiscal restraint, together with lower exchange rate
volatility and a better anchoring of exchange rate expectations, are expected to contribute to a
gradual decline in month-on-month inflation going forward. The need to maintain a tighter
monetary stance for longer has meant higher interest rates, which, together with authorities’
continued efforts at extending maturities, have generated higher interest costs and somewhat
increased debt levels.
18. The program faces significant downside risks. The main risk remains a protracted shift in
portfolio preferences away from Argentine assets as a result of increased uncertainties about the
future political landscape. This could manifest as increased dollarization which will trigger
depreciation pressures, passing through to inflation and leading to an increase in the debt-GDP
ratio and greater loss of FX reserves than projected in the baseline. This is likely to be combined with
a reluctance to roll over both peso and FX debt which, given the high rollover rates needed in the
baseline, could create a budgetary financing gap and deepen concerns over the liquidity, and
possibly solvency, of the sovereign. A shift out of pesos and increased concerns about debt
sustainability are likely to feed on each other. It is of concern, then, that the recent shortening of
maturities has increased short-term financing needs and exacerbated rollover risks in the run-up to
the election. Notwithstanding significant risks from volatility and uncertainty, continued
implementation of the debt management strategy as market conditions allow will help mitigate risks

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in the election period. Over the medium term, debt sustainability remains highly vulnerable to
shocks, particularly negative growth surprises. Beyond these financial risks, it is possible that
inflation will remain stuck at very high levels or the expected recovery in activity could be delayed.
This would lead to worsening social outcomes, rising poverty, and an erosion in public support for
the government’s policy program.
PROGRAM IMPLEMENTATION
19. All end-March performance criteria and the end-June performance criteria for which
data is available have been met. The end-June money base ended at AR$1,342 billion, AR$1 billion
below the target. Net international reserves overperformed the end-June target by US$3.3 billion
and non-deliverable forwards was at US$3.6 billion about US$6,6 billion above the target. While
information will not be available to assess the end-June fiscal targets at the time of the Executive
Board consideration of the Fourth Review, data for April and May and preliminary information
indicated that they will all likely be met. All end-March performance criteria were met. Social
spending exceeded the floor by AR$12 billion and the primary balance in Q1 was AR$10.3 billion,
comfortably meeting the program target of AR$6 billion. The indicative target for the primary
balance of the general government was exceeded.
20. The end-June structural benchmark was met. The authorities have developed a tax
compliance improvement plan for 2019 based on the tax administration’s Strategic Plan for
2019-2023 and Action Plan for 2019. Their priorities include reducing the VAT gap; lowering
taxpayer compliance costs; undertaking risk-based tax audits; and reducing the scope for abuse of
the simplified tax regime. Detailed compliance improvement programs—including for large
taxpayers, high net wealth individuals, and small taxpayers—are being deployed to increase
compliance levels and boost revenues.
MAINTAINING FISCAL DISCIPLINE

21. The 2019 primary deficit is expected to be 0.3 percent of GDP, within the program
target after the adjustors for social and capital spending are applied. The main changes to the
fiscal outlook since the third review include:
• The policy measures announced in the first four months of the year add 0.2 percent of GDP to
spending. 2
• Weaker tax collection in real terms is likely to lower revenues by around 1 percent of GDP. This
revision is driven by a broad-based weak real growth in taxes, with the largest downward
revisions being in income taxes (0.3 percent of GDP), VAT (0.2 percent of GDP), and in financial
2
These include bringing forward increases in child allowances, raising the minimum income threshold for payroll
taxes, providing interest free payment plans for gas consumption to mitigate the impact of tariff increases (by
allowing the consumer to spread the costs from winter to summer months when bills are typically lower).

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transaction taxes (0.1 percent of GDP), where the latter two remain affected by weak activity
while the former reflects labor market weakness and shifts in to the informal sector.
• The reinstatement of a higher rate of VAT on imports (which is creditable against invoiced sales
by those importers) and higher import tariffs boost revenues by around 0.1 percent of GDP in
2019. Clearly an increase in import tariffs is contrary to staff’s recommendation to increase
openness and remove obstacles to free trade. Furthermore, the higher tariffs are likely to pass
directly into inflation. However, the authorities face important constraints in implementing more
high-quality fiscal measures since they would require congressional approval in the run-up to
national and state-level elections.
• Higher inflation will erode wages and pension spending by around 0.2 and 0.5 percent of GDP,
respectively (even after accounting for the 30 percent wage increase that will be phased in from
June 2019-June 2020). Although higher inflation has benefitted the fiscal accounts in this again
represents a low-quality means to achieve the needed fiscal adjustment and will increase fiscal
risks in 2020 (when backward indexation will kick-in and boost expenditure-GDP).
• On balance, the federal government primary deficit target remains subject to risks. The ongoing
recession is taking a heavy toll on income and consumption tax receipts, and the recent recovery
in export taxes is still tentative. Moreover, the decisions to freeze utility tariffs until end-2019
and provide generous tax incentives to SMEs are creating additional fiscal uncertainties. These
risks are alleviated by the existing buffer in capital spending, which can offset unexpected
revenue weakness or higher than expected current spending.
22. The authorities continue to expand their funding for certain social programs that
support gender equity and shield the vulnerable. These are expected to cost less than 0.1
percent of GDP and will be accommodated within the headroom provided by the social spending
adjustor.
• Expanding the Primera Infancia program which supports low income and vulnerable families
through a network of government-run childcare centers that are designed to care for children
aged 0-3 years old and help women with small children return to the labor force. The IDB has
been working with the government to improve the quality of services at these centers.
• Increasing spending on unemployment insurance, scholarship programs for students from
low-income families, formulation and implementation of public policy programs to support
gender equity, and comprehensive support programs for mothers, children, and teens.
In order to ensure that expenditures on these additional programs are protected, the authorities
have requested that the definition of the floor and the adjustor on social spending under the
program be expanded to incorporate these programs. In the medium term, authorities continue to
work with the World Bank on improving data gathering (e.g. household survey and the roll out of a
time-use survey). Lastly, congressional approval of legislation to increase paternity leave and legal
changes to eliminate tax disincentives for female labor force participation will be key to level the
playing field for women.

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23. Recent court rulings and newly implemented measures have added to the federal
government’s fiscal obligations.
• A court ruling found that the province of San Luis should be compensated by the federal
government for insufficiently sharing “co-participated” fiscal revenues between 2006 and 2010.
A similar ruling is pending for the province of Santa Fe. The combined cost to the federal
government from these court decisions is expected to be around 0.3-0.5 percent of GDP but
payments are likely be distributed across several years, starting in 2020.
• In March 2019, the Supreme Court ruled that it was unconstitutional for vulnerable retirees to
pay income tax. The ruling appears to have no immediate fiscal implication but, if Congress
extends this exemption to all retirees, the estimated fiscal cost could be about 0.04 percent of
GDP per year.
Federal Government Balance, in percent of GDP
2018 2019
II Review III Review IV Review

Actual
(IMF) (IMF) (IMF)
Total revenue 25.3 28.1 26.4 25.5

Taxes 17.2 19.8 18.2 17.2
of which: VAT (net of devolutions) 7.3 7.6 7.4 7.2
of which: Export taxes 0.8 2.5 1.7 1.7
of which: Import taxes 0.7 0.8 0.7 0.7
Social security contributions 6.2 6.3 6.0 6.1
Non-tax revenue 1.9 2.0 2.2 2.2
Primary spending 27.9 28.1 26.4 25.9

Federal 19.4 19.4 18.0 18.2
Wages 3.4 3.6 3.3 3.2
Goods and services 1.0 0.8 0.8 0.8
Pensions 8.9 9.6 9.2 8.8
Social spending under the program 1/ 1.3 1.3 1.4 1.4
Other social assistance 1/ 1.3 1.3 0.9 1.0
Subsidies 1.9 1.5 1.4 1.6
Capital 1.3 0.9 0.8 1.2
Other 0.4 0.3 0.2 0.1
Transfers to provinces 8.5 8.8 8.4 7.7
Automatic 7.4 8.1 7.8 7.2
Discretionary 1.1 0.7 0.6 0.5
Primary Balance -2.6 0.0 0.0 -0.3
Memorandum item:
GDP, in billion of pesos 14,567 18,532 20,175 21,226
Sources: Ministerio de Finanzas and IMF staff calculations.
1/ The set of social spending programs considered towards the program floor on social spending changed between the second
and third program review.
• Moreover, the significant tax exemptions for the software, biotechnology, and other sectors
recently passed by Congress create important risks to the medium-term fiscal objectives which
will require careful examination.

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24. The plan to expand Public-Private Partnerships (PPPs) has the potential to add to the
Federal government’s contingent liabilities. There is a need to strengthen the governance
surrounding PPP projects—which largely takes place through trust funds and off-budget
operations—and improve the analysis and management of the fiscal risks associated with such
projects.
MONETARY AND EXCHANGE RATE POLICIES

25. The monetary policy framework introduced last October has led short-term interest
rates to respond flexibly to changing demand for peso assets. If there is a shift in portfolio
preferences away from the peso that leads to disorderly movements in the currency, the
BCRA would respond with sales of FX which would lead to a contraction of the money supply, raise
interest rates, and create the conditions for the system to self-equilibrate. Similarly, if there is an
increase in demand for the peso, the central bank would be able to purchase up to US$150 million
per day in FX (if needed) and expand the money supply to meet this shift toward pesos. 3 Finally, if
the peso were to be relatively stable, then sustained implementation of the BCRA’s targets on the
monetary base will provide a robust nominal anchor, help rebuild central bank credibility, and bring
down inflation (countering the considerable backward-looking inertia in the wage and price-setting
process in Argentina).
26. The recent changes to the monetary policy framework are expected to improve its
operation and address seasonal cash demand without leading to a loosening in the monetary
stance. The reduction of URR in July is appropriate to address the seasonal increase for money
demand in that month, and the reduction in the monetary base target in August, September and
October fully accounts for the reversal of this seasonality. Furthermore, the changes in regulation
that link the reserve requirement to the deposits of the previous month are in line with best
international practices and will provide certainty about the size of the reserve positions and facilitate
banks’ liquidity management. These are technical fine-tuning of the framework to prevent undue
volatility in short-term interest rates and are not intended to alter the monetary stance. The
maintenance of a minimum rate for the LELIQs until end-July that is adjusted in line with inflation
expectations will ensure that ex-ante real interest rates will remain close to their currently high
levels.
27. The stock of central bank liabilities (LELIQs) has risen above AR$1,000 billion but
remains well below its Q1 2018 peak as a share of either GDP or the monetary base. Over the
medium-term, the stock of LELIQs is expected to grow broadly in line with nominal GDP, even as
real interest rates remain at high levels for a protracted period.
3
While BCRA’s decision in April to forego FX purchases from the market has been extended to July, in future months
the BCRA could announce that it would begin purchasing FX again in the event that this was judged to be necessary.

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DEBT MANAGEMENT
28. The government is prioritizing toward
longer maturities. In April and May, given the
steepness in the yield curve and a diminished
appetite for duration, the authorities issued mostly
shorter maturities (LECAPS at 3 months and LETES
at 2 to 3 months) to maximize rollovers and build
cash buffers. This, however, has increased the
needed rollover rate for rest of the year to ensure
the program remains fully financed (to 75 percent,
from 65/70 percent in Q3/Q4 at the time of the
third review). Going forward, the authorities intend
to continue to take advantage of improving
market conditions to reverse the shortening of maturities and maintain rollover rates above that
assumed in the program’s revised baseline. In particular, market conditions permitting, authorities
will re-double efforts at placing at least 50 percent of issuances into bonds that mature in
2020 while also targeting the build-up of a cash buffer before the elections. Newly introduced
measures (¶29) will help support these efforts.
29. The authorities continue to make efforts at improving their debt issuance strategy. To
encourage a reallocation of demand towards longer-date securities, authorities changed the
allotment strategy on June 25, by allocating new issuances first to longer-term securities and
meeting the demand for shorter-maturity bonds only in the event of a shortfall in demand for
longer duration bonds. At the same time, the authorities have also placed longer term debt at
higher interest rates (with the spread between 3 and 6-month FX debt rising by 70 bps) over the
past two weeks. To improve secondary market liquidity in domestic markets, the government has
rolled out a market-maker program which should help bolster demand for domestic law
instruments, particularly from mutual funds. In a similar vein, the Treasury is expected to institute a
new securities-lending facility to support market functioning, allow market makers to better
discharge their responsibilities, and support secondary market liquidity. Staff will continue engaging
with authorities on possible opportunities, including from mini-tenders of existing instruments
based on reverse inquiries from investors and refinancing mechanisms to smooth out spikes in
coupons or amortizations (as was done with the DUO in May).
BOOSTING GROWTH
30. Reducing trade restrictions will be key for reigniting growth. The recent trade
agreement between Mercosur and the European Union and modifications to the free trade
agreement with Chile (which incorporates new guidelines and procedures for investment as well as
measures to facilitate trade in services, telecommunications and e-commerce) are important steps
forward. Although Mercosur membership limits Argentina’s capacity to unilaterally lower tariffs

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(which are high by international standards) there is significant scope to continue lowering a range of
non-tariff barriers. For instance, despite important reductions in the use of non-automatic import
licenses (such as intermediate goods in the automotive and agricultural sectors), there is still room
for improvement in this area. The authorities continue to examine improvements to Mercosur´s
common external tariff and are also working within Mercosur to negotiate free-trade agreements
with Canada and the European Free Trade Association. There is also scope to unilaterally reduce
tariffs on goods that are not subject to the common external tariffs. Finally, more can be done to
eliminate FDI restrictions.
31. A holistic reform of the tax system is needed to reduce distortions and improve
efficiency. The 2017 tax reform and the 2018 Fiscal Pact brought about a welcome reduction in the
tax burden on enterprises, provided relief to low-income workers, and lessened provincial-level
turnover taxes. However, several distortionary taxes remain in place (e.g., notably the financial
transaction tax and reliance on export taxes) and the combined taxation of labor income remains
high by international comparison. A comprehensive overhaul of the tax system is urgently needed to
phase out distortionary taxes, broaden coverage of the personal income tax, scale back VAT
exemptions and reduced rates, and increase revenues from consumption taxes.
32. The energy sector holds untapped

Energy trade balance
potential to boost GDP growth, create jobs, and (percent of GDP)
strengthen the trade balance. After a substantial 5.0
Trade balance
decline of production between 2003 and 2018, 4.0
Exports
conventional oil and gas is now growing rapidly. In 3.0 Imports
2018, unconventional (shale) production of both oil 2.0
and natural gas increased by 48 percent from the 1.0
previous year and now constitute 17 percent and 0.0
40 percent of total production, respectively. -1.0
Renewables share in electricity production has -2.0
increased markedly and is expected to account for

2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019 (e)
12 percent of total consumption by year-end. The Source: Secretary of Energy.
combined effect has increased the energy trade balance from a sizable deficit to close to balance.
The government has also instituted an electronic auction system to increase transparency and
competition in the market for natural gas. Further improvements in the regulatory and legal
framework for energy investments, ensuring that tariffs fully reflect international energy prices,
would boost investments in upstream and downstream infrastructure. This would help ensure the
Argentine energy sector becomes an important contributor to growth and job creation in the
coming years.

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TACKLING CORRUPTION
33. The government has been making important advances to improve governance and
transparency.
• An executive order launched and approved the 2019-2023 National Anti-Corruption Plan in April
2019. The plan focuses on prioritizing institutional strengthening, modernization of the state,
including improving transparency, integrity, and investigations/sanctions. An advisory
committee composed of civil society, private sector, and other experts, will be established in the
coming months to monitor the implementation of the Plan.
• The authorities also submitted to Congress the amendments to the Ethics in Public Service Law
which grants the Office of Anti-corruption the necessary authority, powers, roles, responsibilities,
and sanctions to more effectively fight corruption and further engage in anti-corruption
activities with other competent authorities.
• In April 2019, the Minister of Justice approved the implementation of the e-declaration system,
on a trial basis. Full implementation will further enhance transparency and support the existing
AML/CFT regime and ongoing criminal investigations.
• The authorities have begun implementing and verifying the company registry making
information available on-line for all companies that are established and incorporated in
Argentina.
34. Legislation is being prepared to strengthen the Anti-Money Laundering Law. By

end-September 2019, the authorities will submit to Congress amendments to this law which will
include a process for the Financial Intelligence Unit to freeze funds and other assets when there are
suspicions of money laundering, terrorism financing, or evidence that such funds or assets are linked
to corruption or other crimes.
PROGRAM ISSUES
35. The program remains fully financed and Argentina’s capacity to repay remains
adequate, albeit subject to heightened risks. Financing assumptions have been revised to take
into account the shortening of maturities but, at a higher average rollover rate, the program remains
fully financed. The Fund’s exposure in terms of debt service metrics remain at the higher end
compared to other exceptional access cases, and the frontloaded disbursement schedule implies a
considerable bunching of Argentina’s repurchase obligations to the Fund. Indicators of Fund credit
have also deteriorated since the third review, for instance, with Fund debt service peaking at nearly
25 percent of exports (versus 23.7 percent before). Outstanding credit to the Fund as percent of
GDP has also increased by 2022. Nonetheless, international reserves, which have been boosted by
FX purchases, the augmented China swap, and the building of Treasury cash buffers, are projected
to remain adequate throughout the program and the repayment period. Financing from other
multilateral sources has also been disbursing broadly in line with original program assumptions.

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Sustained program implementation will be crucial to reduce sovereign and balance of payments
risks, lower spreads, increase access to global capital markets, and allow Argentina to smoothly exit
from Fund financial support.
36. Elevated public debt and financing needs, and high sensitivity to market movements,
pose debt sustainability risks for Argentina. Public debt stood at 87 percent of GDP at end-2018,
following a large upward revision at the third review, and 2019 gross financing needs exceed 15
percent of GDP. These metrics, combined with Argentina’s large share of foreign currency-
denominated debt, relatively low export-to-GDP ratio, and comparably small domestic banking
system, imply debt vulnerabilities. In addition, there is political uncertainty ahead of the elections, as
demonstrated by the market sell-off in late April which increased sovereign spreads above levels
prevailing at the time of the third review. Nonetheless, the peso depreciation and decline in rollover
rates have unwound in May and June, demonstrating Argentina’s ability to rebound from a
temporary erosion in confidence. With continued adherence to the program through the election
period and beyond, this normalization in market conditions would be expected to continue. In
addition, a large portion of Argentina’s debt is held by classes of investors, including domestic
financial institutions, retail investors and other public entities, whose rollover rates are expected to
remain high. Public debt-to-GDP is expected to decline to 77 percent by end-2020 and is still
projected to fall to 60 percent in the medium-term, reflecting the implementation of the
programmed fiscal consolidation. This trajectory remains subject to downside risks related to the
exchange rate, interest rates, economic growth, and contingent liabilities. Moreover, the higher
gross financing needs arising from the recent shortening of maturities pose liquidity risk in the
coming months. Notwithstanding these heightened vulnerabilities, Argentina’s debt is assessed as
sustainable but not with a high probability.
37. Safeguards. The authorities have begun to submit a weekly analysis of the use of
IMF budget support and have initiated preparations to assess the recapitalization needs of the
BCRA. Congressional passage of the recently-submitted charter for the central bank is expected to
occur only after the national elections have concluded. Staff is following up on the implementation
of other safeguards recommendations to strengthen the internal audit function and controls on
compilation of monetary data.
38. Fiscal Safeguards. Preparations are underway for a plan to transfer the Treasury Single
Account from Banco Nación (BN) to the BCRA (an end-September structural benchmark). The
authorities remain committed to concluding the transfer by June 2020.
39. Program conditionality. The authorities request the following modifications to program
targets:
• The end-September ceiling for non-deliverable forwards is increased from US$1 to

US$3.6 billion.
• The end-September performance criterion for the primary balance of the federal government is
increased from AR$60 billion to AR$70 billion.

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• The end-September performance criteria for the Base Money target will be lowered to
AR$1,311 from AR$1,343 billion to reflect a reversal of the changes in URR in July to
accommodate a seasonal increase in currency demand.
• Expanding the definition of the social assistance adjustor to the primary balance and the floor
on social spending and increasing the end-September social spending floor to take into account
this new definition.
• Introducing an adjustor to the NIR target to incorporate the changes to the BCRA’s policy for
potential FX sales to counter disorderly market conditions.
New quantitative performance criteria are proposed for end-December.
40. Multiple currency practice. Staff supports the authorities’ request that the Executive Board
grant temporary approval (i.e. an additional 12 months) of the retention of the multiple currency
price auction put in place in June 2018 that staff has assessed gives rise to the multiple currency
practice. Approval was initially granted upon approval of the arrangement for a twelve-month
period but has since expired. Staff continues to assess that the conditions for approval are met, as
the measure is (i) maintained for non-balance of payment reasons; (ii) temporary; (iii) does not harm
the interests of other members; and (iv) does not discriminate between Fund members.
41. The authorities continue to make good faith efforts to resolve US$1.2 billion in
principal (or US$3.2 billion including accrued interest) in outstanding arrears to external
private creditors. The authorities continue to make payments under the agreements executed.
Since the third review, authorities have made payment to the Japanese intermediary banks on the
holdouts agreement and as a result, there are now no more Japanese claims on Argentina of any
type. Authorities continue to work on a potential agreement to eliminate Argentina’s official arrears
to the French export credit agency (approximately US$30 million in principal) which are related to
construction of a gas pipeline by a French company in the late 1970s.
EXCEPTIONAL ACCESS CRITERIA

42. Argentina continues to meet the criteria for exceptional access:
• CRITERION 1. The member is experiencing or has the potential to experience exceptional

balance of payments pressures on the current account or capital account resulting in a
need for Fund financing that cannot be met within the normal limits. Still fragile market
confidence implies that Argentina’s sizable external financing needs (which are largely driven by
the interest and amortization obligations of the federal government) over the course of the
arrangement cannot be met within the normal limits of access.
• CRITERION 2. A rigorous and systematic analysis indicates that debt is sustainable but not
with a high probability; exceptional access is justified as financing from sources other than
the Fund improves debt sustainability and sufficiently enhances the safeguards for Fund
resources. With public debt assessed as sustainable, but not with a high probability, exceptional

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access requires the existence of non-Fund financing that improves debt sustainability and
ensures sufficient safeguards for Fund resources. Despite risks to debt sustainability from the
high levels of gross (and external) financing needs and large share of FX debt, staff judges that
the required safeguards are in place. Argentina maintains access to domestic markets and
continues to issue new liabilities to both resident and non-resident investors. A significant share
of liabilities is held by classes of investors, including domestic financial institutions, retail
investors and other public entities, who are expected to continue investing in Argentine debt
even amid stressed conditions. Also, the long maturity of Argentina’s privately-held foreign
currency-denominated debt improves the prospects of adequate private creditor exposure
being maintained throughout the program. 4
• CRITERION 3. Staff judges that the member has prospects of gaining or regaining access to
private capital markets within a timeframe and on a scale that would enable the member
to meet its obligations falling due to the Fund. Argentina continues to maintain access to
domestic financial markets, where resident and non-resident investors have continued to
participate in peso- and US$-denominated bond placements. Also, in June, the state-owned oil
and gas company successfully issued a 10-year global bond. After averaging over 100 percent in
Q1, private sector rollover rates fell in April (reflecting market volatility and the non-rollover of
the Global 2019 bond) but have since rebounded in May/June. While average yields on
Argentina’s external bonds remain elevated, the sustained implementation of Argentina’s policy
program, combined with support from the international community, will help ensure Argentina
has full access to private capital markets, on reasonable terms and on a scale that will allow
Argentina to meet its obligations to the Fund as they fall due.
• CRITERION 4. Staff judges that the policy program provides a reasonably strong prospect of
success, including not only the member’s adjustment plans but also its institutional and
political capacity to deliver that adjustment. The authorities’ implementation of the policy
plan supported by the Stand-By Arrangement confirms their commitment to restore fiscal
discipline and macroeconomic stability. The central bank has fully implemented the monetary
policy framework announced last October which will serve to lower inflation, restore
macroeconomic stability, and rebuild the central bank’s credibility. Furthermore, the passage of
the BCRA charter will help in these efforts. Contacts with key members of the opposition
revealed clear support for the objectives of the program including reducing the fiscal deficit,
lowering inflation, returning Argentina to robust and sustained growth, and protecting the
vulnerable. Nonetheless, candidates were critical of the achievements of the Macri
administration and indicated that, if elected, the Fund program would need to continue but that
they would want to renegotiate the details of the Stand-By Arrangement to be more consistent
with their own policy plans. The opposition candidates showed support for structural reforms to
support stronger and more sustainable growth (although there were different views on the
details and appropriate sequencing of such reforms).
4 Of the outstanding stock of the federal government’s foreign currency debt held by the private sector
(US$117 billion), only about one quarter is expected to mature by June 2021 (the expiry of the SBA).

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STAFF APPRAISAL
43. The authorities continue to steadfastly implement their policy program. Fiscal targets
have been met and the central bank has consistently adhered to its target of zero growth in base
money. However, breaking Argentina’s considerable inflation inertia will take time and a consistent
implementation of the authorities’ policy framework. Economic activity is expected to start to show
renewed growth in the second quarter of this year but the recovery from the recession is likely to be
protracted.
44. However, risks to the program are high, with the most challenging election period still
ahead. Financial markets have stabilized since April, but Argentina remains exposed to the
possibility of bouts of market volatility in the coming months, largely linked to the uncertainty
surrounding the upcoming elections. The shortening of maturities over the past few months have
added to the financing needs in the months immediately before the elections. A wavering in market
confidence can quickly translate into higher sovereign spreads and difficulty meeting fiscal financing
needs and could impact debt sustainability. A shift in investor preferences away from peso assets
could put pressures on the exchange rate (which directly feed back into the debt dynamics given the
large share of the debt in foreign currency) and lead to a greater loss of reserves than projected in
staff baseline.
45. The 2019 fiscal targets appear within reach, though risks remain. Higher than
anticipated inflation and conservative execution of spending have offset a weakening of tax revenue
performance. The building of buffers in capital expenditures for the later part of the year further
protect fiscal targets against additional revenue underperformance. The authorities’ request to raise
the September primary balance target demonstrates their strong commitment to fiscal discipline
and should help secure fiscal gains going into the last quarter. The freeze in utility tariffs has delayed
the authorities’ objective to sharply reduce the attendant subsidies, but this delay is expected to be
overcome during the remainder of the program.
46. Recent changes to the FX intervention framework have reassured investors and helped
reduce volatility of the peso. The BCRA’s willingness to undertake unsterilized FX sales in the event
of disorderly market conditions have contributed to a better anchoring of exchange rate
expectations, supporting a lowering of monthly inflation outcomes in the remainder of this year.
Continued adherence to the BCRA’s monetary policy framework will foster macroeconomic
stabilization and a gradual reduction of inflation as well as allow for a self-equilibration of the
system in the event of a shift in portfolio preferences either to, or away from, peso-denominated
assets.
47. The authorities should look for opportunities to increase rollover rates and lengthen
the average maturity of government debt. This may involve temporarily incurring a higher cost to
place longer maturity government liabilities, but this will provide a significant benefit in reducing
gross financing needs in the coming months and avoiding a bunching of maturities and thus
reducing financing risks. The authorities’ efforts to improve the structure of local sovereign debt

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markets, including strengthening the functioning of market makers, will help improve market
liquidity and ultimately lessen financing costs.
48. Prioritizing and expanding social programs is an essential component of the

authorities’ policy plans. The authorities’ social protection strategy continues to be aimed at
protecting key spending and improving efficiency, while allowing for flexibility to best shield the
vulnerable from the effect of the economic downturn. The expansion of the social spending floor to
additional programs continues to protect key spending, particularly for programs that support
adults without children (who may fall outside the conditional cash transfer perimeter) and
low-income working mothers. The adjustment of the floor reflects important efforts to close
coverage gaps and improve gender equity. Going forward, the authorities should redouble ongoing
efforts with the World Bank and the IDB in areas such as data gathering (including improvements in
the household survey and the roll out of time-use survey) and improved childcare provision. In
addition, congressional approval of legislation to increase paternity leave and legal changes to
eliminate tax disincentives for female labor force participation should remain at the forefront of the
legislative agenda.
49. Authorities should continue with their efforts to open Argentina to international trade
and should reinvigorate their plans for structural reforms. The authorities’ measures to continue
improving the supportive environment for SMEs and trade facilitation are important ongoing
initiatives. In particular, the MERCOSUR-EU trade agreement should help remove the remaining
barriers to trade and obstacles to investment. But the sustained improvement in the living standards
for Argentina’s population will need a new impetus in other areas, including by putting in place a
less distortionary tax system; increasing competition in domestic product markets; strengthening the
financial position of the public pension system, and deepening efforts to strengthen governance
and confront corruption.
50. Steadfast implementation of the authorities’ economic plan will be essential to

reassure financial markets and solidify Argentina’s return to macroeconomic stability. Staff
supports the authorities’ request for completion of the Fourth Review under the Stand-By
Arrangement, the modifications of the performance criteria under the program, waivers of
applicability, and the completion of the financing assurances review. Lastly, staff also supports the
authorities’ request for the temporary approval, for another twelve months, of the retention of the
measure that gives rise to the multiple currency practice.

ARGENTINA
Figure 1. Recent Market Developments
1-year CDS spreads have fallen from the peak in April. Sovereign spreads also fell at end June but remain high.
Credit Default Swaps EMBI
(Basis points) (Basis points)
2,000 1,100
1 year 5 years Argentina
1,800 1,000
1,600 Latin America
900
1,400
1,200 800
1,000 700
800 600
600
500
400
200 400
0 300
Aug-18
Oct-18
May-18
Sep-18
May-19
Nov-18
Jun-18
Jun-19
Jul-18
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Aug-18
Oct-18
May-18
Sep-18
May-19
Nov-18
Jun-18
Jun-19
Jul-18
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Source: Bloomberg. Source: Bloomberg.
FX debt yield curve remains strongly inverted… … and the peso yield curve continues to shift downward.
Argentina Sovereign Curve - AR Law Argentina Sovereign Curve
(Percent, US$ denominated bonds) (Percent, AR$ denominated bonds)
20 60
55 28-Jun-19
18
50
16 45 21-Jun-19
14 40 27-May-19
35
12 30
27-Jun-19
10 25
20-Jun-19 20
8 15
27-May-19
6 10
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Maturity (years) Maturity (years)
Source: Bloomberg. Source: Bloomberg.
Portfolio flows fell in May in line with less favorable

The stock market has recovered the losses since February.
conditions for the region.
Merval Stock Index Bond Country Inflows: ETFs/Mutual Funds
(Level) (Mil. US$)*
6,000 Latin America Argentina (RHS)
38,000
36,000 4,000
34,000 2,000
32,000
0
30,000
-2,000
28,000
26,000 -4,000
24,000 -6,000
Aug-18
Oct-18
May-18
Sep-18
May-19
Nov-18
Jun-18
Jun-19
Jul-18
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Aug-15
Aug-16
Aug-17
Aug-18
May-15
May-16
May-17
May-18
May-19
Nov-15
Nov-16
Nov-17
Nov-18
Feb-16
Feb-17
Feb-18
Feb-19
Source: Bloomberg. Source: EPFR.

ARGENTINA
Figure 2. Real Sector

As of 2019Q1, most GDP components are around their Although in 2019Q1 growth is likely to be weaker than
2014 levels. expected…
Real GDP components High frequency indicators growth
(Index, 2014 average =100) (Percent)
150 GDP 50 50
140 Private consumption 40 40
Public consumption 30 30
130 Exports
20 20
120 Imports
Investment 10 10
110 0 0
100 -10 -10
90 2014 average = 100 -20 -20
-30 Construction (3m, MA, SAAR) -30
80 Monthly Activity (3m, M A, S AAR)
-40 -40
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Manufacturing Production (3m, MA, SAAR)
-50 -50
May-17
Sep-17
May-18
Sep-18
May-19
Nov-17
Nov-18
Jul-17
Jul-18
Mar-18
Mar-19
Jan-18
Jan-19
Source: Bloomberg.
Source: INDEC
… starting in 2019Q2 economic activity will be supported
Inflation, while still high, has receded from the 2019 peak
by a recovery in the agricultural sector.
Agro Harvest and Value Inflation surprise
70
(REM minus actual m/m inflation, percent)
Soy Corn Wheat 3.0 7
60 One-month ahead
2.5 6
Current month
50
2.0 Inflation (RHS) 5
40 1.5
4
30 1.0
20 3
0.5
10 0.0 2
0 -0.5 1
2015/16
2016/17
2017/18
2018/19
2017
2018
2019
-1.0 0
Aug-18
Oct-18
May-18
Sep-18
May-19
Nov-18
Jun-18
Jul-18
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Production (mn tonnes) Harvest Value (US$ bn)

Source: Buenos Aires grain exchange. Sources: BCRA and IMF staff calculations.
… explained in part by the freeze in utility tariffs… … and lower volatility in the nominal exchange rate.
CPI Inflation Headline inflation and Exchange rate

(m/m, percent) (m/m, percent)
7 10 30
Food 9 Headline inflation 25
6 Regulated 8
Depreciation (RHS) 20
5 Non-food non-regulated 7
Total 6 15
4 5 10
4 5
3
3
0
2 2
1 -5
1
0 -10
0
Aug-18
Oct-18
May-18
Sep-18
May-19
Nov-18
Jun-18
Apr-18
Jul-18
Apr-19
Mar-18
Mar-19
Jan-18
Feb-18
Jan-19
Feb-19
Dec-18
Sep-18
Oct-18
Mar-18
Mar-19
Apr-18
Jun-18
Apr-19
Dec-18
Feb-18
Feb-19
May-18
May-19
Aug-18
Jan-18
Jan-19
Nov-18
Jul-18
Source: BCRA.
Sources: INDEC and IMF staff calculations.

ARGENTINA
Figure 3. FX and Monetary Developments

… but markets have not yet validated the new reference
Exchange rate volatility fell in June…
zone…
Exchange Rate Exchange rate

(ARS / USD) (AR$/US$, spot and futures)
59
50 70
Volatility (RHS) 1/ Exchange rate Futures
60 55
45
50 51
40
40 47
35
30 43
30
20
39
25 10
35
20 -
31
Aug-18
Oct-18
May-18
Sep-18
May-19
Nov-18
Jun-18
Jun-19
Jul-18
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Aug-19
Oct-18
Oct-19
May-19
Sep-19
Nov-18
Nov-19
Jun-19
Apr-19
Jul-19
Mar-19
Jan-19
Feb-19
Dec-18
Dec-19
Source: Bloomberg. 1/ Annualized volatility of the
relative price change for the 30 most recent days. Source: Bloomberg.
There has been some dollarization pressure on deposits so

Implicit depreciation from futures declined in June.
far in 2019.
Implicit depreciation from futures on
Ratio of Dollar to Peso Deposits
AR$/US$ (Percent, annualized rate)
100 70% $47
Ratio of dollar to peso deposits
3 months 6 months
90 Exchange rate (RHS) $45
65%
80 $43
70
60% $41
60
$39
50 55%
$37
40
50% $35
30
Oct-18
Sep-18
May-19
Nov-18
Jun-19
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Oct-18
Sep-18
May-19
Nov-18
Jun-19
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Source: Bloomberg. Source: BCRA.
The shrinking of private sector credit has accelerated…. … consistent with the rising lending rates.
Change in stock of credit to the private Lending and Deposit Rates

sector (in millions of ARS and percent) (in percent)
150 30% 80 30
Spread of lending to deposit rate
100 20% Lending rates to individuals
60 Lending rate to SMEs
50 10% 20
Deposit rates
- 0%
40
(50) -10%
10
(100) -20% 20
Monthly change in ARS
(150) -30%
y-o-y % change in real terms (RHS)
0 0
(200) -40%
Sep-17
May-18
Sep-18
May-19
Nov-17
Nov-18
Jul-17
Jul-18
Mar-18
Mar-19
Jan-18
Jan-19
Aug-17
Aug-18
Oct-17
Oct-18
Jun-17
Jun-18
Apr-17
Apr-18
Apr-19
Feb-18
Feb-19
Dec-17
Dec-18
Source: BCRA. Sources: BCRA and IMF staff calculations.

ARGENTINA
Figure 4. Fiscal and Financing

The fiscal accounts have been in surplus for five months… … relying largely on expenditure restraint…
Cumulative Primary Balance Jan-May Federal Government Primary Expenditures

(percent of GDP) Revenues Jan-May 2019 (difference with 2018, ppts of GDP)
Current Spending
10% Capital Spending 0.3% 0.2%
Primary Balance (RHS) Wages + Pensions
0.0%
5% 0.1% Energy Subsidies
-0.2%
Capital spending
0% -0.1% -0.4%
Transfers to provinces
-0.6%
-5% -0.3% Other
-0.8%
TOTAL Primary
-10% -0.5% -1.0% Spending
2018 2019 Expenditures
Market volatility in April had a detrimental effect on rollover

… to compensate for soft revenues.
rates…
Federal Government Revenues Jan-May Private sector rollover and sovereign
2019 (difference with 2018, ppts of GDP) spreads (Rate and basis points) 1/
0.4% 250% 950
Domestic Tax revenues Total Rollover Rate
EMBIG (average, rhs) 900
200%
0.2% Customs 850
150% 800
Social Sec
0.0%
100% 750
Non-Tax
-0.2% 700
50%
TOTAL Revenues 650
-0.4% 0% 600
Revenues
Oct
Sep
Dec
Apr
Mar
May
Nov
Jun
Feb
Jan
Sources: Bloomberg and IMF staff calculations.
Nonetheless, maturities remain relatively manageable in the

… and led to a shortening of maturities
second half of the year.
Average Maturity of New Issuances Upcoming Amortizations of Public Debt
(months) Held by the Private Sector
15 1000
Maturity (Static, US$mn at constant AR$/US$44.7)
EMBIG (ave., rhs) 900 5,000 Other FX
4,500 Other AR$
10 4,000 US$-T-bills
800
3,500 AR$-T-bills
3,000
700 2,500
5
2,000
600 1,500
1,000
- 500 500
-
Apr-19
Mar-19
Jan-19
Feb-19
Dec-18
Oct-18
Sep-18
May-19
Nov-18
Jun-19
Aug-19
Oct-19
Sep-19
Nov-19
Jun-19
Jul-19
Dec-19
Source: IMF staff calculations.

Source: IMF staff calculations as of June 14.

ARGENTINA
Figure 5. External Sector

The REER appreciated since October 2018 but it’s still
The external adjustment continued in May, both for goods…
below its long-run average
Real effective exchange rate Trade balance
(CPI based index) (Billions of U.S. dollars,12-month rolling sum)
150 8 75
6
70
125 4
Long-run average 2 65
(1998-2019) 0 60
100 -2
-4 55
75 -6 Trade Balance (lhs) 50

-8 Exports 45
-10 Imports
50 -12 40
Jun-98
Jun-99
Jun-00
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
May-16
Sep-16
May-17
May-19
Jan-17
Jan-18
Jan-19
Sep-17
May-18
Sep-18
Source: IMF staff calculations and estimates. Source: IMF staff calculations.
…and services. The contraction in imports was largest for capital goods.
Services, cash basis Contribution to import growth
(Millions of U.S dollars) (yoy, 3movav)
25 2 30 30
- 20 20
20
-2 10 10
15 -4
0 0
-6
10 -10 -10
-8
Consumer goods and passenger cars
-10 -20 Basic and Mfg Fuels and Lubricants -20
Services, balance (LHS)
5 Intermediate goods
Exports -12 -30 -30
Capital goods and spare parts for capital goods
Imports Imports
- -14 -40 -40
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
May-16
Sep-16
May-17
May-19
Nov-16
Jul-16
Mar-17
Jan-17
Jul-17
Jul-18
Mar-18
Mar-19
Jan-18
Jan-19
Sep-17
May-18
Sep-18
Nov-17
Nov-18
Source: BCRA. Source: IMF staff calculations.
Dollarization picked up during March-May and portfolio

Strong agriculture production boosted exports.
investors continued to wind down their peso asset positions
Contribution to export growth Capital flows, Currency basis
(yoy, 3movav) (Millions of U.S dollars, 12m rolling sum)
200 Portfolio
60
30 30
FDI 50
20 20 150 dollarization(capital flight by residents)
Private sector and provinces financing 40
10 10 Federal govt financing
100 IMF,IFI, swap 30
0 0 Change in reserves (rhs)
50 20
-10 Primary -10 10
Manufacture, agriculture
Manufacture, industrial
0
-20 -20 0
Fuel and energy
Exports -50 -10
-30 -30
Aug-15
Aug-16
Aug-17
Aug-18
May-15
May-16
May-17
May-18
May-19
Nov-15
Nov-16
Nov-17
Nov-18
Feb-16
Feb-17
Feb-18
Feb-19
May-16
Sep-16
May-17
May-19
Nov-16
Jul-16
Mar-17
Jan-17
Jul-17
Jul-18
Mar-18
Mar-19
Jan-18
Jan-19
Sep-17
May-18
Sep-18
Nov-17
Nov-18
Source: BCRA.
Source: IMF staff calculations.

ARGENTINA
Table 1. Argentina: Selected Economic and Financial Indicators

Est. 3rd rev 3rd rev Proj.
2015 2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
(Annual percentage changes unless otherwise indicated)
National income, prices, and labor markets
GDP at constant prices 2.7 -2.1 2.7 -2.5 -1.2 2.2 -1.3 1.1 2.6 3.4 3.6 3.6
Domestic demand 4.2 -1.6 6.0 -3.4 -5.1 3.7 -6.8 0.8 3.1 5.9 4.5 4.8
Consumption 4.2 -0.7 3.8 -2.5 -2.9 5.8 -4.4 0.8 2.9 5.6 4.1 4.9
Private 3.7 -0.8 4.0 -2.4 -2.3 6.6 -4.8 1.3 3.5 6.2 4.5 5.5
Public 6.9 -0.5 2.7 -3.3 -6.4 1.7 -2.5 -1.6 -0.6 2.2 1.3 1.1
Investment 3.5 -5.8 12.2 -5.7 -14.5 -6.9 -17.5 0.4 4.5 7.9 7.3 4.9
Exports -2.8 5.3 1.7 -0.7 9.5 3.5 9.5 2.5 4.5 3.6 6.6 5.3
Imports 4.7 5.8 15.4 -4.7 -8.3 9.3 -14.2 1.0 6.4 13.5 9.3 9.4
Change in inventories and stat. disc. (contribution to growth) 0.2 0.1 0.8 -0.4 -0.1 0.0 -0.1 0.0 0.0 0.0 0.0 0.0
Nominal GDP (billions of Argentine pesos) 5,955 8,228 10,645 14,606 20,175 25,458 21,232 28,841 36,874 43,304 48,497 52,825
Output gap (percent) 0.8 -1.6 -0.2 -4.2 -7.0 -6.7 -7.1 -7.8 -7.3 -6.0 -4.5 -3.0
CPI inflation (eop, y/y percent change) … … 24.8 47.6 30.5 21.2 40.2 32.1 19.2 10.1 7.0 5.0
GDP deflator (y/y percent change) 26.5 41.2 25.8 41.3 39.6 23.6 46.8 34.5 24.5 13.6 8.0 5.0
Unemployment rate (percent) … 8.5 8.4 9.2 9.9 9.9 10.0 10.1 10.0 9.8 9.4 9.1
(Percent of GDP unless otherwise indicated)
External sector
Exports f.o.b. (goods, billions of U.S. dollars) 56.8 58.0 58.6 61.6 70.0 73.4 66.6 69.4 72.9 75.8 81.1 85.9
Imports f.o.b. (goods, billions of U.S. dollars) 57.6 53.5 64.1 62.5 57.2 62.5 53.1 54.1 58.6 64.9 71.5 79.0
Trade balance (goods, billions of U.S. dollars) -0.8 4.4 -5.5 -0.9 12.7 10.9 13.5 15.2 14.2 10.9 9.6 6.9
Trade balance (goods) -0.1 0.8 -0.9 -0.2 2.7 2.1 2.9 3.0 2.5 1.8 1.5 1.0
Terms of trade (percent change) -4.4 6.0 -2.8 1.2 3.2 1.4 0.1 0.3 -0.4 -0.5 -0.5 -0.6
Total external debt 27.9 34.1 37.0 52.2 59.8 55.7 58.7 52.3 49.9 47.1 44.1 44.5
Savings-Investment balance
Gross domestic investment 15.6 14.3 15.0 14.4 14.3 13.7 14.1 14.1 14.2 14.4 14.6 14.6
Private 11.9 10.9 11.5 10.9 11.2 10.5 10.5 10.4 10.2 10.1 10.4 10.3
Public 3.6 3.4 3.5 3.6 3.1 3.2 3.6 3.7 4.0 4.3 4.2 4.3
Gross national savings 12.8 11.6 10.1 9.2 12.3 11.2 12.3 12.5 12.4 12.4 12.5 12.2
Current account balance -2.7 -2.7 -4.9 -5.2 -2.0 -2.5 -1.8 -1.6 -1.8 -2.0 -2.1 -2.4
Public sector 1/
Primary balance (incl. adjustors) -4.4 -4.8 -4.2 -2.2 0.0 1.1 -0.4 1.4 1.4 1.6 1.7 1.8
of which : Federal government (incl.adjustors) -3.8 -4.2 -3.8 -2.7 0.0 1.0 -0.3 1.0 1.0 1.0 1.1 1.3
memo : Structural federal primary balance 2/ -4.2 -4.8 -4.0 -1.9 1.0 1.9 0.8 2.1 2.0 1.9 1.8 1.8
Overall balance (incl. adjustors) 3/ -6.0 -6.7 -6.7 -5.2 -2.7 -1.5 -3.5 -2.1 -1.9 -1.8 -1.5 -1.3
of which : Federal government (incl. adjustors) -5.1 -5.8 -5.9 -5.3 -2.5 -1.4 -3.2 -2.2 -2.2 -2.2 -1.9 -1.7
Revenues 35.4 34.9 34.5 33.7 34.8 35.3 34.1 35.4 35.4 36.1 36.1 36.1
Primary expenditure 4/ 39.8 39.6 38.7 35.9 34.8 34.2 34.4 34.0 34.0 34.5 34.4 34.3
Total public debt (federal, % GDP) 52.6 53.1 57.1 86.1 75.9 69.0 76.9 70.1 64.6 62.6 61.3 60.0
Money and credit

Monetary base (monthly average, y/y percent change) 40.5 26.6 24.7 36.0 6.8 27.2 3.2 14.2 28.3 18.0 13.4 21.8
M2 (percent change) 28.2 30.4 25.8 22.5 -1.8 43.1 -1.9 28.0 38.0 22.5 15.6 24.7
Credit to the private sector (eop, y/y percent change) 35.6 31.0 51.3 36.6 15.8 24.9 7.8 16.8 26.8 19.8 10.8 12.0
Credit to the private sector real (eop, y/y percent change) … … 21.2 -7.5 -11.2 3.1 -23.1 -11.6 6.4 8.8 3.6 6.7
Interest rate (eop) 5/ 32.2 23.9 28.8 59.3 41.0 30.7 55.8 38.0 19.5 14.0 13.1 13.1
Real interest rate (eop), 12-m ahead y/y inflation 5/ … … 10.0 23.4 14.2 10.8 17.6 12.1 9.8 8.6 7.8 7.8
Memorandum items
Gross international reserves (billions of U.S. dollars) 25.6 39.3 55.1 65.8 62.2 68.3 59.7 65.9 72.1 77.6 83.7 90.0
Gross international reserves (percent of ARA) 39.4 73.0 92.0 94.4 97.0 103.2 93.5 101.5 108.7 119.1 130.9 142.1
Change in REER (eop, percent change) 5.3 -3.4 6.9 -30.6 5.8 4.0 6.0 3.7 2.5 1.6 1.1 0.9
Sources: Ministerio de Hacienda y Finanzas Públicas, Banco Central de la República Argentina (BCRA), and Fund staff estimates.
1/ The primary balance excludes profit transfers from the central bank of Argentina. Interest expenditure is net of property income from the social security fund before 2016.
2/ Percent of potential GDP.
3/ Excludes overall balance of the BCRA.
4/ Includes transfers to municipalities, but excludes municipal spending.
5/ Average of all LEBAC maturities before 2017 and midpoint of the repo corridor starting in 2017; 7-day LELIQ rate from August 2018.

ARGENTINA
Table 2. Argentina: Summary Balance of Payments

2015 2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
(Billions of U.S. dollars)
Current account -17.6 -15.1 -31.6 -28.0 -9.4 -12.8 -8.4 -8.2 -10.1 -12.1 -13.6 -16.2
Trade balance in goods -0.8 4.4 -5.5 -0.9 12.7 10.9 13.5 15.2 14.2 10.9 9.6 6.9
Exports f.o.b. 56.8 58.0 58.6 61.6 70.0 73.4 66.6 69.4 72.9 75.8 81.1 85.9
Primary products 13.3 15.7 14.8 14.0 19.9 19.4 17.0 16.4 18.7 19.9 21.5 23.3
Manufactures of agricultural origin 23.3 23.3 22.6 22.9 23.6 24.8 24.1 25.6 26.0 26.6 27.6 28.7
Manufactures of industrial origin 18.0 16.9 18.8 20.4 21.5 23.0 21.3 22.2 22.4 23.0 23.9 24.9
Energy 2.2 2.0 2.5 4.3 4.9 6.2 4.1 5.1 5.7 6.4 8.1 9.0
Imports f.o.b. 57.6 53.5 64.1 62.5 57.2 62.5 53.1 54.1 58.6 64.9 71.5 79.0
Capital goods (includes parts and accessories) 23.4 22.5 26.6 23.3 22.2 24.4 20.1 20.5 22.3 24.9 27.7 30.9
Intermediate goods 17.3 14.8 17.1 19.5 17.8 19.3 16.9 17.2 18.5 20.4 22.3 24.5
Consumer goods 10.5 11.6 14.8 13.4 12.4 13.7 10.6 11.0 11.9 13.2 14.6 16.1
Fuels and lubricants 6.4 4.7 5.6 6.2 4.9 5.2 5.5 5.5 5.9 6.4 6.9 7.5
Trade balance in services -5.8 -8.5 -10.1 -9.7 -6.2 -8.0 -6.1 -8.3 -10.9 -10.6 -10.7 -10.7
Exports 13.2 13.4 14.8 14.1 14.2 13.6 14.2 13.7 14.3 15.0 16.7 18.5
Imports 19.0 21.9 24.9 23.8 20.4 21.6 20.3 22.0 25.2 25.6 27.4 29.2
Primary income, net -12.1 -12.2 -16.4 -18.7 -17.1 -16.8 -17.2 -16.5 -14.9 -13.8 -13.9 -13.9
Secondary income, net 1.1 1.1 0.4 1.3 1.1 1.1 1.4 1.4 1.4 1.4 1.4 1.4
Capital Account 0.1 0.4 0.1 0.1 0.2 0.2 0.2 0.1 0.1 0.2 0.1 0.1
Financial Account 13.6 28.3 45.8 9.7 -19.9 11.9 -23.7 7.5 15.0 29.6 37.9 26.0
Foreign direct investment, net 10.9 1.5 10.4 10.3 2.0 4.5 7.6 8.7 9.9 11.3 12.8 14.2
Portfolio investment, net 0.4 35.3 35.9 6.6 -15.3 6.6 -22.3 6.2 14.7 23.1 25.4 13.5
Derivatives, net 0.0 -0.2 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other investment, net 1/ 2.2 -8.2 -0.6 -7.3 -6.6 0.7 -9.1 -7.5 -9.5 -4.7 -0.4 -1.7
Errors and Omissions -0.9 0.8 0.2 -0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overall balance -4.9 14.3 14.6 -18.7 -29.2 -0.8 -32.0 -0.6 5.0 17.7 24.4 9.9
Financing 4.9 -14.3 -14.6 18.7 29.2 0.8 32.0 0.6 -5.0 -17.7 -24.4 -9.9
Gross official reserves (increase: -) 4.9 -14.3 -14.6 -11.3 3.3 -6.1 6.1 -6.2 -6.2 -5.5 -6.1 -6.3
Net use of IMF resources 28.4 22.9 3.9 22.9 3.9 -1.8 -20.3 -22.6 -7.9
Official financing 0.0 0.0 0.0 1.6 3.0 2.9 3.0 2.9 2.9 8.1 4.3 4.3
World Bank/IDB 1.0 2.3 2.9 2.3 2.9 2.9 8.1 4.3 4.3
CAF 0.6 0.7 0.7
(Percent of GDP)
Current account -2.7 -2.7 -4.9 -5.2 -2.0 -2.5 -1.8 -1.6 -1.8 -2.0 -2.1 -2.4
Trade balance in goods -0.1 0.8 -0.9 -0.2 2.7 2.1 2.9 3.0 2.5 1.8 1.5 1.0
Exports, f.o.b. 8.9 10.4 9.1 11.5 14.6 14.3 14.4 13.5 13.0 12.6 12.6 12.8
Imports f.o.b. -9.0 -9.6 -10.0 -11.6 -12.0 -12.1 -11.5 -10.5 -10.5 -10.8 -11.1 -11.8
Trade balance in services -0.9 -1.5 -1.6 -1.8 -1.3 -1.6 -1.3 -1.6 -1.9 -1.8 -1.7 -1.6
Exports 2.1 2.4 2.3 2.6 3.0 2.6 3.1 2.6 2.6 2.5 2.6 2.8
Imports -3.0 -3.9 -3.9 -4.4 -4.3 -4.2 -4.4 -4.3 -4.5 -4.3 -4.2 -4.4
Primary income, net -1.9 -2.2 -2.6 -3.5 -3.6 -3.3 -3.7 -3.2 -2.7 -2.3 -2.1 -2.1
Secondary income, net 0.2 0.2 0.1 0.2 0.2 0.2 0.3 0.3 0.3 0.2 0.2 0.2
Capital Account 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Financial Account 2.1 5.1 7.1 1.9 -4.2 2.3 -4.9 1.4 2.7 4.9 5.8 3.9
Foreign direct investment, net 1.7 0.3 1.6 1.9 0.4 0.9 1.7 1.7 1.8 1.9 2.0 2.1
Portfolio investment, net 0.1 6.3 5.6 1.2 -3.2 1.3 -4.8 1.2 2.6 3.8 3.9 2.0
Derivatives, net 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other investment, net 0.3 -1.5 -0.1 -1.4 -1.4 0.1 -1.9 -1.4 -1.7 -0.8 -0.1 -0.3
Errors and Omissions -0.1 0.1 0.0 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overall balance -0.8 2.6 2.3 -3.6 -6.1 -0.1 -6.6 -0.1 0.9 2.9 3.8 1.5
Financing 0.8 -2.6 -2.3 3.6 6.1 0.1 6.6 0.1 -0.9 -2.9 -3.8 -1.5
Gross official reserves (increase: -) 0.8 -2.6 -2.3 -2.2 0.7 -1.2 1.3 -1.2 -1.1 -0.9 -0.9 -0.9
Net use of IMF resources 5.5 4.8 0.8 4.8 0.8 -0.3 -3.4 -3.5 -1.2
Official financing 0.0 0.0 0.0 0.3 0.6 0.6 0.6 0.6 0.5 1.4 0.7 0.6
World Bank/IDB 0.2 0.5 0.6 0.5 0.6 0.5 1.4 0.7 0.6
CAF 0.1 0.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0
Memorandum items:
Exports volumes (percent change) -1.6 6.8 -0.2 -0.6 10.2 3.6 8.7 2.8 4.7 3.6 6.5 5.3
Imports volumes (percent change) 2.6 3.6 14.2 -5.6 -8.9 9.4 -14.8 1.1 7.4 9.7 9.1 9.3
Gross international reserves (billions of U.S. dollars) 25.6 39.3 55.1 65.8 62.2 68.3 59.7 65.9 72.1 77.6 83.7 90.0
Gross international reserves (percent of ARA) 39.4 73.0 92.0 94.4 97.0 103.2 93.5 101.5 108.7 119.1 130.9 142.1
Net international reserves (billions of U.S. dollars) -2.6 12.5 31.1 22.8 19.2 25.3 11.9 18.2 24.3 29.8 35.9 42.2
Net International Investment Position (percent of GDP) 8.8 8.6 2.7 12.5 -0.2 -2.3 13.9 13.1 12.6 11.2 9.3 7.7
Terms of Trade (Index, 2000 = 100) 506 536 521 528 548 556 528 530 528 525 523 520
Real effective exchange rate (percent change) 5.3 -3.4 6.9 -30.6 5.8 4.0 6.0 3.7 2.5 1.6 1.1 0.9
Sources: INDEC, Fund staff estimates and projections.
1/ Includes currency swap transactions.

Table 3. Argentina: Consolidated Public-Sector Operations
2012 2013 2014 2015 2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
(Billions of Argentine pesos)
Revenues 891.7 1,150.1 1,584.4 2,105.9 2,868.9 3,670.1 4,918.0 7,018.6 8,990.6 7,228.7 10,211.7 13,044.6 15,611.0 17,476.8 19,050.4
Tax revenues 621.0 802.3 1,109.3 1,439.9 1,960.1 2,454.1 3,285.0 4,781.1 6,269.5 4,831.8 6,976.7 8,797.3 10,461.2 11,804.9 12,782.9
Social security contributions 219.5 287.8 378.3 529.5 709.8 924.6 1,158.0 1,551.7 1,969.9 1,643.9 2,353.8 3,147.3 3,886.1 4,249.7 4,717.2
Other revenues 51.2 60.0 96.8 136.5 199.0 291.5 475.0 685.8 751.2 753.0 881.3 1,100.0 1,263.7 1,422.2 1,550.3
Primary Expenditures 1/ 936.4 1,238.5 1,744.7 2,368.9 3,260.8 4,120.9 5,246.3 7,011.1 8,710.4 7,312.0 9,799.6 12,515.7 14,935.5 16,662.7 18,089.7
Wages 294.4 378.2 523.7 738.7 1,008.4 1,281.3 1,586.1 2,163.5 2,730.2 2,176.7 2,987.9 3,788.7 4,494.4 4,995.2 5,379.0
Goods and services 64.3 86.3 120.4 169.7 205.8 280.0 359.1 455.5 552.2 485.9 628.6 788.1 910.1 992.0 1,057.6
Transfers to the private sector 407.8 532.4 752.4 1,056.4 1,517.3 1,888.6 2,416.8 3,276.2 4,003.1 3,402.4 4,427.9 5,607.4 6,651.1 7,481.9 8,155.4
Of which: federal pensions 204.6 272.1 363.4 535.7 734.7 1,022.5 1,291.7 1,848.8 2,447.9 1,868.4 2,581.3 3,318.8 4,060.6 4,582.9 5,003.3
Capital spending 83.2 121.0 171.6 216.6 280.1 375.5 518.8 631.8 821.6 758.8 1,077.9 1,465.4 1,862.8 2,054.5 2,256.9
Other 86.8 120.5 176.6 187.5 249.3 295.4 365.5 484.2 603.4 488.2 677.4 866.1 1,017.1 1,139.1 1,241
Primary balance (incl. adjustors) -44.7 -88.4 -160.3 -263.1 -391.8 -450.8 -328.3 7.5 280.2 -83.2 412.1 528.9 675.6 814.1 960.7
Interest cash 34.9 20.6 34.5 94.2 155.7 262.8 434.9 549.5 653.0 669.8 1,005.8 1,245.1 1,443.7 1,534.0 1,653.2
Overall balance (incl. adjustors) -79.6 -108.9 -194.7 -357.3 -547.6 -713.5 -763.2 -542.0 -372.8 -753.0 -593.7 -716.2 -768.2 -719.9 -692.5
(Percent of GDP unless otherwise indicated)
Revenues 33.8 34.3 34.6 35.4 34.9 34.5 33.7 34.8 35.3 34.1 35.4 35.4 36.1 36.1 36.1
Tax revenues 23.5 24.0 24.2 24.2 23.8 23.1 22.5 23.7 24.6 22.8 24.2 23.9 24.2 24.4 24.2
Social security contributions 8.3 8.6 8.3 8.9 8.6 8.7 7.9 7.7 7.7 7.7 8.2 8.5 9.0 8.8 8.9
Other revenues 1.9 1.8 2.1 2.3 2.4 2.7 3.3 3.4 3.0 3.5 3.1 3.0 2.9 2.9 2.9
Primary expenditures 1/ 35.5 37.0 38.1 39.8 39.6 38.7 35.9 34.8 34.2 34.4 34.0 34.0 34.5 34.4 34.3
Wages 11.2 11.3 11.4 12.4 12.3 12.0 10.9 10.7 10.7 10.3 10.4 10.3 10.4 10.3 10.2
Goods and services 2.4 2.6 2.6 2.8 2.5 2.6 2.5 2.3 2.2 2.3 2.2 2.1 2.1 2.0 2.0
Transfers to the private sector 15.5 15.9 16.4 17.7 18.4 17.7 16.5 16.2 15.7 16.0 15.4 15.2 15.4 15.4 15.4
Of which: federal pensions 7.8 8.1 7.9 9.0 8.9 9.6 8.8 9.2 9.6 8.8 9.0 9.0 9.4 9.5 9.5
Capital spending 3.2 3.6 3.7 3.6 3.4 3.5 3.6 3.1 3.2 3.6 3.7 4.0 4.3 4.2 4.3
Other 3.3 3.6 3.9 3.1 3.0 2.8 2.5 2.4 2.4 2.3 2.4 2.4 2.4 2.4 2.4
Primary balance (incl. adjustors) -1.7 -2.6 -3.5 -4.4 -4.8 -4.2 -2.2 0.0 1.1 -0.4 1.4 1.4 1.6 1.7 1.8
Interest cash 1.3 0.6 0.8 1.6 1.9 2.5 3.0 2.7 2.6 3.2 3.5 3.4 3.3 3.2 3.1
Overall balance (incl. adjustors) -3.0 -3.3 -4.3 -6.0 -6.7 -6.7 -5.2 -2.7 -1.5 -3.5 -2.1 -1.9 -1.8 -1.5 -1.3
Structural primary balance (General Government) 2/ -2.3 -3.5 -3.4 -5.0 -5.1 -4.3 -1.0 1.8 2.7 1.4 3.3 3.2 3.1 2.8 2.6
Structural primary balance (Federal) 2/ -1.7 -3.0 -3.5 -4.2 -4.8 -4.0 -1.9 1.0 1.9 0.8 2.1 2.0 1.9 1.8 1.8
Structural primary balance (Provinces) 2/ -0.6 -0.5 0.1 -0.7 -0.3 -0.3 0.9 0.7 0.7 0.6 1.2 1.1 1.2 1.0 0.8
Sources: Ministerio de Economía y Finanzas Públicas and Fund staff calculations.

INTERNATIONAL MONETARY FUND
1/ Include transfers to municipalities, but exclude municipal spending.

ARGENTINA
31
ARGENTINA
Table 4. Argentina: Federal Government Operations

2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
Revenues 2,188.2 2,754.7 3,675.3 5,320.8 6,920.6 5,421.8 7,697.5 9,751.3 11,610.4 13,040.6 14,216.1
Tax revenues 1,535.6 1,874.2 2,489.3 3,661.8 4,908.1 3,654.3 5,319.9 6,605.3 7,757.2 8,825.0 9,537.1
Social security contributions 558.1 727.3 901.9 1,218.1 1,548.9 1,292.9 1,877.1 2,537.9 3,170.5 3,448.2 3,844.2
Nontax revenues 94.6 153.2 284.0 440.8 463.6 474.5 500.5 608.1 682.7 767.4 834.8
Primary expenditures 2,537.0 3,159.6 4,065.0 5,326.3 6,671.5 5,489.9 7,412.8 9,397.5 11,193.7 12,524.4 13,522.1
Federal expenditures 1,840.3 2,233.6 2,832.8 3,640.9 4,399.4 3,862.3 5,047.6 6,439.6 7,710.8 8,609.5 9,378.6
Wages 1/ 316.8 401.0 498.7 664.6 804.4 673.5 890.9 1,106.9 1,307.0 1,456.3 1,574.0
Goods and services 1/ 91.8 121.5 146.2 161.8 186.7 180.3 215.3 267.5 307.6 333.9 354.5
Pensions 734.7 1,022.5 1,291.7 1,848.8 2,447.9 1,868.4 2,581.3 3,318.8 4,060.6 4,582.9 5,003.3
Current transfers to private sector 511.0 507.7 654.5 767.7 693.8 858.8 916.4 1,091.8 1,146.7 1,272.5 1,377.9
Social assistance 219.9 282.0 373.3 480.2 613.6 517.1 675.2 836.6 997.7 1,111.1 1,202.9
Of which: social spending under the program 2/ 108.2 141.6 184.9 290.0 383.0 300.7 393.1 500.7 610.2 690.2 757.8
Energy 3/ 209.2 125.7 177.9 202.8 44.3 237.7 220.9 230.7 121.6 132.3 144.2
Transport 80.2 90.5 102.1 82.7 35.9 101.8 20.3 24.6 27.4 29.2 30.8
Other 1.7 9.6 1.2 2.0 0.0 2.1 0.0 0.0 0.0 0.0 0.0
Capital spending 117.8 121.1 182.9 157.6 223.4 260.0 400.5 599.3 824.0 891.2 989.8
Other current primary spending 68.0 59.7 58.8 40.4 43.3 21.2 43.2 55.3 64.9 72.7 79.2
Transfers to provinces 696.8 926.0 1,232.1 1,685.4 2,272.1 1,627.6 2,365.2 2,957.9 3,482.9 3,914.9 4,143.5
Automatic 558.9 756.6 1,074.7 1,564.3 2,175.3 1,521.5 2,307.5 2,884.2 3,396.4 3,817.9 4,037.9
Discretionary 137.8 169.5 157.4 121.1 96.7 106.1 57.7 73.7 86.6 96.9 105.6
Capital 64.3 86.8 78.2 38.3 50.9 31.8 28.8 36.9 43.3 48.5 52.8
Current 73.6 82.7 79.3 82.7 45.8 74.3 28.8 36.9 43.3 48.5 52.8
Primary balance (incl. adjustors) -348.8 -404.9 -389.7 -5.5 249.1 -68.1 284.7 353.8 416.6 516.2 694.0
Interest cash (net of non-financial public sector) 4/ 131.3 224.9 388.9 490.0 594.2 602.5 922.2 1,160.4 1,357.2 1,458.3 1,586.9
Overall balance (incl. adjustors) -480.1 -629.8 -778.6 -495.4 -345.1 -670.6 -637.4 -806.6 -940.5 -942.1 -892.9
Memorandum items:
Total gross interest spending 131.3 389.0 513.9 911.7 1,112.2 709.4 1,055.5 1,286.7 1,467.7 1,683.6 1,849.0
Capital spending, including capital transfers to provinces 182.0 207.9 261.0 196.0 274.3 291.9 429.3 636.1 867.3 939.6 1,042.6
Arrears and advances -33.0 15.0 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Primary balance, accrual basis -315.8 -419.9 -399.7 -5.5 249.1 -68.1 284.7 353.8 416.6 516.2 694.0
Overall balance, accrual basis -447.1 -644.8 -788.6 -495.4 -345.1 -670.6 -637.4 -806.6 -940.5 -942.1 -892.9
Structural primary balance -401.9 -427.1 -292.4 227.5 529.3 175.2 657.8 807.6 874.9 895.4 973.7
(Percent of GDP)
Revenues 26.6 25.9 25.2 26.4 27.2 25.5 26.7 26.4 26.8 26.9 26.9
Tax revenues 18.7 17.6 17.0 18.2 19.3 17.2 18.4 17.9 17.9 18.2 18.1
Social security contributions 6.8 6.8 6.2 6.0 6.1 6.1 6.5 6.9 7.3 7.1 7.3
Nontax revenues 1.1 1.4 1.9 2.2 1.8 2.2 1.7 1.6 1.6 1.6 1.6
Primary expenditures 30.8 29.7 27.8 26.4 26.2 25.9 25.7 25.5 25.8 25.8 25.6
Federal expenditures 22.4 21.0 19.4 18.0 17.3 18.2 17.5 17.5 17.8 17.8 17.8
Wages 1/ 3.9 3.8 3.4 3.3 3.2 3.2 3.1 3.0 3.0 3.0 3.0
Goods and services 1/ 1.1 1.1 1.0 0.8 0.7 0.8 0.7 0.7 0.7 0.7 0.7
Pensions 8.9 9.6 8.8 9.2 9.6 8.8 9.0 9.0 9.4 9.4 9.5
Current transfers to private sector 6.2 4.8 4.5 3.8 2.7 4.0 3.2 3.0 2.6 2.6 2.6
Social assistance 2.7 2.6 2.6 2.4 2.4 2.4 2.3 2.3 2.3 2.3 2.3
Of which: social spending under the program 2/ 1.3 1.3 1.3 1.4 1.5 1.4 1.4 1.4 1.4 1.4 1.4
Energy 3/ 2.5 1.2 1.2 1.0 0.2 1.1 0.8 0.6 0.3 0.3 0.3
Transport 1.0 0.9 0.7 0.4 0.1 0.5 0.1 0.1 0.1 0.1 0.1
Other 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Capital spending 1.4 1.1 1.3 0.8 0.9 1.2 1.4 1.6 1.9 1.8 1.9
Other current primary spending 0.8 0.6 0.4 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1
Transfers to provinces 8.5 8.7 8.4 8.4 8.9 7.7 8.2 8.0 8.0 8.1 7.8
Automatic 6.8 7.1 7.4 7.8 8.5 7.2 8.0 7.8 7.8 7.9 7.6
Discretionary 1.7 1.6 1.1 0.6 0.4 0.5 0.2 0.2 0.2 0.2 0.2
Capital 0.8 0.8 0.5 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1
Current 0.9 0.8 0.5 0.4 0.2 0.3 0.1 0.1 0.1 0.1 0.1
Primary balance (incl. adjustors) -4.2 -3.8 -2.7 0.0 1.0 -0.3 1.0 1.0 1.0 1.1 1.3
Interest cash (net of non-financial public sector) 4/ 1.6 2.1 2.7 2.4 2.3 2.8 3.2 3.1 3.1 3.0 3.0
Overall balance (incl. adjustors) -5.8 -5.9 -5.3 -2.5 -1.4 -3.2 -2.2 -2.2 -2.2 -1.9 -1.7
Memorandum items:
Total gross interest spending 1.6 3.7 3.5 4.3 3.8 3.3 3.7 3.5 3.4 3.5 3.5
Capital spending, including capital transfers to provinces 2.2 2.0 1.8 1.0 1.1 1.4 1.5 1.7 2.0 1.9 2.0
Arrears and advances -0.4 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Primary balance, accrual basis -3.8 -3.9 -2.7 0.0 1.0 -0.3 1.0 1.0 1.0 1.1 1.3
Overall balance, accrual basis -5.4 -6.1 -5.4 -2.5 -1.4 -3.2 -2.2 -2.2 -2.2 -1.9 -1.7
Structural primary balance 5/ -4.8 -4.0 -1.9 1.0 1.9 0.8 2.1 2.0 1.9 1.8 1.8
Sources: Ministerio de Economía y Finanzas Públicas and Fund staff calculations.
1/ It includes universities.
2/ It includes the one-off payments in September and December 2018. It does not include the 15,000 million pesos increase in AUH announced in early
March 2019.
3/ It includes, in 2017, those obligations for subsidies under Plan Gas that will be settled starting in 2019.
4/ Includes interest payments to private, official, and financial public sector.

ARGENTINA
Table 5A. Argentina: Summary Operations of the Central Bank

(end of period, unless otherwise indicated)
2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
(In billions of Argentine pesos)
Net foreign assets 469 837 1,704 1,482 1,783 1,552 1,899 2,305 2,702 3,160 3,654
Net domestic assets 353 164 -295 -8 88 -127 -276 -211 -236 -355 -248
Credit to the public sector (net) 1,456 1,603 1,632 1,761 1,957 1,842 2,206 2,605 3,501 4,473 4,918
of which: Temporary advances to federal government 382 472 503 503 503 503 503 503 503 503 503
of which: Non-marketable government bonds 772 915 1,137 1,527 1,730 1,392 1,724 1,957 2,070 2,156 2,252
Credit to the financial sector excluding securities -246 -241 -537 -734 -929 -767 -1,061 -1,342 -1,585 -1,856 -2,312
BCRA securities -699 -1,160 -735 -989 -1,314 -1,096 -1,987 -2,629 -3,081 -3,657 -4,064
Official capital and other items (net) -158 -38 -655 -44 374 -106 565 1,155 930 684 1,211
Monetary base 822 1,001 1,409 1,474 1,871 1,425 1,623 2,094 2,467 2,804 3,406
Currency issued 595 787 860 1,020 1,247 1,014 1,329 1,653 1,875 2,078 2,105
Bank deposits at the central bank (peso-denominated) 227 214 549 454 624 411 294 441 592 727 1,302
(As a percentage of GDP)

Net foreign assets 5.7 7.9 11.7 7.3 7.0 7.3 6.6 6.3 6.2 6.5 6.9
Net domestic assets 4.3 1.5 -2.0 0.0 0.3 -0.6 -1.0 -0.6 -0.5 -0.7 -0.5
Credit to the public sector (net) 17.7 15.1 11.2 8.7 7.7 8.7 7.6 7.1 8.1 9.2 9.3
of which: Temporary advances to federal government 4.6 4.4 3.4 2.5 2.0 2.4 1.7 1.4 1.2 1.0 1.0
of which: Non-marketable government bonds 9.4 8.6 7.8 7.6 6.8 6.6 6.0 5.3 4.8 4.4 4.3
Credit to the financial sector (net) -3.0 -2.3 -3.7 -3.6 -3.6 -3.6 -3.7 -3.6 -3.7 -3.8 -4.4
BCRA securities -8.5 -10.9 -5.0 -4.9 -5.2 -5.2 -6.9 -7.1 -7.1 -7.5 -7.7
Official capital and other items (net) -1.9 -0.4 -4.5 -0.2 1.5 -0.5 2.0 3.1 2.1 1.4 2.3
Monetary base 10.0 9.4 9.6 7.3 7.3 6.7 5.6 5.7 5.7 5.8 6.4
Currency issued 7.2 7.4 5.9 5.1 4.9 4.8 4.6 4.5 4.3 4.3 4.0
Bank deposits at the central bank (peso-denominated) 2.8 2.0 3.8 2.3 2.5 1.9 1.0 1.2 1.4 1.5 2.5
(Changes in monetary base (y/y, in AR$ billion))
Change in monetary base 198 179 408 65 397 16 198 471 373 338 602
Foreign exchange purchases (net) 209 266 -430 -234 301 -398 348 406 397 457 494
Operations with the public sector 151 143 21 2 0 4 0 0 0 0 0
Sterilization (net) (-) -177 -227 801 296 96 411 -150 65 -24 -119 107
Other items (net) 14 -3 16 2 0 -2 0 0 0 0 0
Memorandum items:
Monetary base (eop, yoy, percent change) 31.7 21.8 40.7 4.6 26.9 1.1 13.9 29.0 17.8 13.7 21.5
Monetary base (monthly average, yoy, percent change) 26.6 24.7 36.0 6.8 27.2 3.2 14.2 28.3 18.0 13.4 21.8
M2 (AR$ billions) 1/ 1,372 1,726 2,115 2,076 2,971 2,075 2,655 3,664 4,489 5,188 6,472
M2 (yoy, percent change) 1/ 30.4 25.8 22.5 -1.8 43.1 -1.9 28.0 38.0 22.5 15.6 24.7
Gross international reserves (US$ billions) 39.3 55.1 65.8 62.2 68.3 59.7 65.9 72.1 77.6 83.7 90.0
Interest rate (eop) 2/ 23.9 28.8 59.3 41.0 30.7 55.8 38.0 19.5 14.0 13.1 13.1
Real interest rate (eop), 12-m ahead y/y inflation 2/ 3.6 10.0 23.4 14.2 10.8 17.6 12.1 9.8 8.6 7.8 7.8
Sources: Banco Central de la República Argentina (BCRA) and Fund staff estimates.
1/ Currency in circulation outside banks plus peso-denominated deposits in checking and savings accounts.
2/ Average of all LEBAC maturities before 2017, midpoint of the repo corridor from 2017 to July 2018; 7-day LELIQ rate from August 2018.

ARGENTINA
Table 5B. Argentina: Summary Operations of the Banking Sector

2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
(In billions of Argentine pesos)
Net foreign assets 33 -13 88 77 226 59 89 134 172 207 201
Net domestic assets 1,482 1,973 3,097 3,874 5,195 3,949 5,225 6,960 8,414 9,791 12,302
Credit to the public sector (net) -97 -119 -239 -127 -1 40 100 250 312 402 317
Gross credit to public sector 385 502 809 1,209 1,630 1,235 1,847 2,419 2,776 3,138 3,414
Deposits from the public sector -482 -621 -1,048 -1,336 -1,631 -1,195 -1,747 -2,169 -2,463 -2,736 -3,097
Claims on the central bank 883 980 1,919 2,316 3,037 2,414 3,526 4,641 5,518 6,528 7,970
Holdings of central bank securities 345 441 720 989 1,314 1,096 1,987 2,629 3,081 3,657 4,064
Reserves at central bank 473 455 1,083 1,189 1,553 1,179 1,355 1,784 2,177 2,583 3,614
Credit to the private sector 1,125 1,701 2,324 2,693 3,365 2,504 2,924 3,708 4,442 4,923 5,514
of which: Dollar denominated 154 292 605 799 962 860 1,129 1,356 1,518 1,684 1,861
of which: Peso denominated 970 1,409 1,719 1,895 2,403 1,644 1,795 2,352 2,924 3,239 3,653
Net capital, reserves, and other assets -429 -589 -907 -1,009 -1,206 -1,008 -1,324 -1,638 -1,858 -2,062 -1,500
Liabilities with the private sector 1,515 1,960 3,185 3,951 5,421 4,008 5,314 7,094 8,586 9,997 12,504
Local currency deposits 1,159 1,464 2,090 2,425 3,471 2,377 3,042 4,199 5,144 5,945 7,416
Foreign currency deposits 357 496 1,095 1,526 1,949 1,630 2,272 2,896 3,442 4,052 5,088
expressed in billion US$ 22 26 29 33 37 33 37 42 47 53 64
(As a percentage of GDP)

Net foreign assets 0.4 -0.1 0.6 0.4 0.9 0.3 0.3 0.4 0.4 0.4 0.4
Net domestic assets 18.0 18.5 21.2 19.2 20.4 18.6 18.1 18.9 19.4 20.2 23.3
Credit to the public sector (net) -1.2 -1.1 -1.6 -0.6 0.0 0.2 0.3 0.7 0.7 0.8 0.6
Gross credit to public sector 4.7 4.7 5.5 6.0 6.4 5.8 6.4 6.6 6.4 6.5 6.5
Deposits of the public sector -5.9 -5.8 -7.2 -6.6 -6.4 -5.6 -6.1 -5.9 -5.7 -5.6 -5.9
Claims on the central bank 10.7 9.2 13.1 11.5 11.9 11.4 12.2 12.6 12.7 13.5 15.1
Holdings of central bank securities 4.2 4.1 4.9 4.9 5.2 5.2 6.9 7.1 7.1 7.5 7.7
Reserves at central bank 5.7 4.3 7.4 5.9 6.1 5.6 4.7 4.8 5.0 5.3 6.8
Credit to the private sector 13.7 16.0 15.9 13.4 13.2 11.8 10.1 10.1 10.3 10.2 10.4
of which: Dollar denominated 1.9 2.7 4.1 4.0 3.8 4.1 3.9 3.7 3.5 3.5 3.5
of which: Peso denominated 11.8 13.2 11.8 9.4 9.4 7.7 6.2 6.4 6.8 6.7 6.9
Net capital, reserves, and other assets -5.2 -5.5 -6.2 -5.0 -4.7 -4.7 -4.6 -4.4 -4.3 -4.3 -2.8
Liabilities with the private sector 18.4 18.4 21.8 19.6 21.3 18.9 18.4 19.2 19.8 20.6 23.7
Local currency deposits 14.1 13.8 14.3 12.0 13.6 11.2 10.5 11.4 11.9 12.3 14.0
Foreign currency deposits 4.3 4.7 7.5 7.6 7.7 7.7 7.9 7.9 7.9 8.4 9.6
Memorandum items:
Credit to the private sector (eop, y/y percent change) 31.0 51.3 36.6 15.8 24.9 7.8 16.8 26.8 19.8 10.8 12.0
Credit to the private sector, real (eop, y/y percent change) … 21.2 -7.5 -11.2 3.1 -23.1 -11.6 6.4 8.8 3.6 6.7
Interest rate on wholesale deposits (eop) 1/ 20.0 23.3 48.6 30.8 21.5 41.9 27.1 13.9 9.9 9.3 9.3
1/ BADLAR index of deposits over 1 million AR$.

ARGENTINA
Table 5C. Argentina: Summary Operations of the Central Bank (Monthly 2019)
2019
Proj
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.
In ARS billions
Net foreign assets 1,689 1,823 1,950 2,223 1,915 2,003 1,885 1,751 1,866 1,715 1,582 1,552
Net domestic assets -336 -420 -598 -820 -627 -653 -569 -438 -571 -447 -306 -127
Credit to the public sector (net) 1,821 1,843 1,920 1,526 1,812 1,735 1,776 1,822 1,742 1,795 1,838 1,842
of which: Temporary advances to federal government 503 503 503 503 503 503 503 503 503 503 503 503
of which: Non-marketable government bonds 1,240 1,306 1,293 1,179 1,266 1,211 1,240 1,272 1,305 1,342 1,372 1,392
Credit to the financial sector excluding securities -521 -535 -669 -705 -744 -652 -667 -684 -704 -728 -748 -767
BCRA securities -867 -856 -948 -948 -982 -1,238 -1,222 -1,155 -1,348 -1,293 -1,216 -1,096
Official capital and other items (net) -768 -872 -901 -692 -673 -499 -457 -420 -261 -222 -180 -106
Monetary base 1,353 1,403 1,352 1,403 1,356 1,350 1,315 1,313 1,295 1,268 1,276 1,425
Currency issued 807 806 805 818 824 857 882 895 901 905 913 1,014
Bank deposits at the central bank (peso-denominated) 546 597 547 585 532 492 434 418 394 363 364 411
Changes in monetary base (m/m, ARS billions)
Change in monetary base -56 50 -52 51 -46 -7 -34 -3 -18 -26 8 148
Foreign exchange purchases (net) 21 16 0 0 0 17 -118 -134 115 -150 -133 -31
Operations with the public sector 4 -2 -2 5 -41 40 0 0 0 0 0 0
Sterilization (net) (-) -78 32 -48 57 -6 -72 84 132 -133 124 141 179
Other items (net) -3 5 -1 -11 1 7 0 0 0 0 0 0
Memorandum items:
Monetary base (average) 1,346 1,343 1,314 1,325 1,343 1,343 1,343 1,325 1,310 1,298 1,298 1,380
Monetary base (average), m/m change 9 -2 -29 10 18 0 0 -18 -15 -12 0 82
Monetary base (average), m/m percent change 0.7 -0.2 -2.1 0.8 1.3 0.0 0.0 -1.3 -1.1 -0.9 0.0 6.3
Monetary base (eop) y/y percent change 40.0 39.9 35.8 40.4 32.9 29.3 23.3 8.6 3.6 9.8 3.0 1.1
Monetary base (eop) m/m percent change -4.0 3.7 -3.7 3.8 -3.3 -0.5 -2.5 -0.2 -1.4 -2.0 0.6 11.6
M2 (AR$ billions) 1/ 1,834 1,831 1,897 1,950 1,956 1,919 1,878 1,891 1,864 1,834 1,854 2,075
M2 (yoy, percent change) 1/ 11.5 12.8 14.1 18.9 13.4 2.3 9.0 0.1 2.0 6.5 4.2 -1.9
Gross international reserves (US$ billions) 66.8 68.0 66.2 71.7 65.2 67.3 65.7 62.7 65.2 63.1 60.3 59.7
Real interest rate (eop), 12-m ahead infl. Exp. 2/ 19.4 16.6 28.8 31.2 29.6 22.3 20.1 18.0 17.9 17.8 17.7 17.6
Table 5D. Argentina: Summary Operations of the Central Bank (Monthly 2020)
2020
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.
In ARS billions
Net foreign assets 1,578 1,604 1,631 1,659 1,687 1,716 1,745 1,775 1,805 1,836 1,867 1,899
Net domestic assets -219 -228 -278 -264 -322 -330 -377 -382 -394 -444 -447 -276
Credit to the public sector (net) 1,877 1,918 1,934 1,975 2,016 2,030 2,070 2,111 2,122 2,160 2,199 2,206
of which: Temporary advances to federal government 503 503 503 503 503 503 503 503 503 503 503 503
of which: Non-marketable government bonds 1,416 1,445 1,474 1,502 1,531 1,560 1,588 1,617 1,644 1,671 1,698 1,724
Credit to the financial sector excluding securities -789 -813 -836 -860 -885 -910 -935 -960 -985 -1,010 -1,036 -1,061
BCRA securities -1,239 -1,303 -1,410 -1,456 -1,575 -1,646 -1,757 -1,827 -1,905 -2,020 -2,092 -1,987
Official capital and other items (net) -67 -31 34 78 121 195 244 294 373 426 481 565
Monetary base 1,359 1,376 1,354 1,395 1,365 1,386 1,368 1,393 1,411 1,392 1,420 1,623
Currency issued 1,052 1,083 1,107 1,136 1,136 1,166 1,187 1,194 1,193 1,195 1,201 1,329
Bank deposits at the central bank (peso-denominated) 307 293 247 259 228 220 182 200 218 197 220 294
Changes in monetary base (m/m, ARS billions)
Change in monetary base -66 17 -23 41 -30 21 -18 25 18 -19 28 202

Foreign exchange purchases (net) 26 27 27 28 28 29 29 30 30 31 31 32
Operations with the public sector 0 0 0 0 0 0 0 0 0 0 0 0
Sterilization (net) (-) -92 -9 -50 14 -58 -8 -47 -5 -12 -50 -3 171
Other items (net) 0 0 0 0 0 0 0 0 0 0 0 0
Memorandum items:
Monetary base (average) 1,380 1,380 1,380 1,380 1,380 1,380 1,394 1,408 1,422 1,436 1,450 1,575
Monetary base (average), m/m change 0 0 0 0 0 0 14 14 14 14 14 125
Monetary base (average), m/m percent change 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 8.6
Monetary base (eop) y/y percent change 0.4 -1.9 0.2 -0.6 0.6 2.7 4.0 6.1 9.0 9.7 11.3 13.9
Monetary base (eop) m/m percent change -4.6 1.3 -1.7 3.1 -2.2 1.6 -1.3 1.8 1.3 -1.4 2.0 14.3
M2 (AR$ billions) 1/ 1,999 2,045 2,032 2,115 2,090 2,143 2,136 2,196 2,245 2,236 2,302 2,655
M2 (yoy, percent change) 1/ 9.0 11.7 7.1 8.5 6.8 11.7 13.7 16.1 20.4 21.9 24.2 28.0
Gross international reserves (US$ billions) 60.2 60.7 61.3 61.8 62.3 62.8 63.3 63.9 64.4 64.9 65.4 65.9
Real interest rate (eop), 12-m ahead infl. Exp. 2/ 16.4 14.9 15.0 15.0 14.9 14.6 14.3 13.9 12.9 13.1 13.2 12.1

ARGENTINA
Table 6. Argentina: External Debt

2015 2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
(Billions of U.S. dollars)
Total external debt (gross; includes holdouts) 178.9 189.6 237.3 280.7 285.5 286.9 270.8 269.8 279.2 283.8 284.7 298.1
Percent of GDP 27.9 34.1 37.0 52.2 59.8 55.7 58.7 52.3 49.9 47.1 44.1 44.5
By type of creditor
Debt to official creditors 46.0 50.3 55.5 82.6 107.3 113.3 105.4 109.3 107.5 93.5 73.6 68.3
Debt to banks 6.2 6.5 8.2 9.7 9.8 9.9 9.3 9.3 9.6 9.8 9.8 10.3
Debt to other private creditors 126.7 132.8 173.6 188.4 168.4 163.8 156.1 151.2 162.1 180.5 201.4 219.6
By type of debtor
Official debt 113.2 130.2 164.1 200.1 202.0 199.0 185.0 178.8 183.0 182.4 174.1 178.4
Bank debt 5.3 5.3 8.9 9.6 11.7 12.9 10.8 12.0 13.2 14.4 15.6 16.8
Non-financial private sector 60.5 54.1 64.4 71.0 71.9 75.1 75.0 79.0 83.0 87.0 95.0 103.0
Sources: Instituto Nacional de Estadística y Censos (INDEC), Banco Central de la República Argentina (BCRA), and Fund staff estimates.
Table 7. Argentina: Public Debt

2015 2016 2017 2018 2019 2020 2019 2020 2021 2022 2023 2024
Gross federal debt 3,130 4,366 6,079 12,569 15,313 17,577 16,320 20,230 23,828 27,113 29,710 31,720
By currency:
In domestic currency 960 1,380 1,937 2,971 3,251 3,796 3,340 4,247 5,683 7,177 8,975 11,217
In foreign currency 2,170 2,986 4,143 9,598 12,062 13,781 12,979 15,983 18,145 19,936 20,736 20,503
(Percent of GDP)
Gross federal debt 52.6 53.1 57.1 86.1 75.9 69.0 76.9 70.1 64.6 62.6 61.3 60.0
By currency:
In domestic currency 16.1 16.8 18.2 20.3 16.1 14.9 15.7 14.7 15.4 16.6 18.5 21.2
In foreign currency 36.4 36.3 38.9 65.7 59.8 54.1 61.1 55.4 49.2 46.0 42.8 38.8
Sources: Ministry of Finance and Fund staff estimates.

Table 8. Argentina: Federal Government Gross Financing Needs and Sources (US$mn)
2019
2019 2020 2021
Jan Feb Mar Apr May Jun Jul Aug Sep Q4
Actual Actual Actual Actual Actual Actual
Primary Deficit (with adjustors) (445) (175) 315 (12) (511) 669 (204) (868) 19 2,385 1,173 (4,853) (5,433)
Without adjustors (445) (7) 231 (155) (884) 774 (777) (801) 2 1,685 (376) (4,997) (5,618)
NCG payments - - - - - - - - - - - - -
Plan Gas Payments - - 150 50 50 50 50 50 50 150 600 600 300
Interest 1,246 100 1,285 1,687 1,391 1,607 1,956 201 1,144 5,659 16,277 19,139 19,658
FX 977 82 377 998 880 770 1,517 87 452 3,103 9,243 9,863 9,777
Non-Financial Public Sector - - 89 114 122 14 150 - 14 424 927 1,067 1,094
Financial Public Sector 84 16 12 57 1 49 661 16 13 655 1,564 1,625 1,592
IFI (non-IMF) 88 40 122 52 356 105 85 35 122 239 1,244 1,221 1,340
Private 805 27 153 775 401 602 621 36 303 1,786 5,508 5,950 5,750
AR$ 270 18 908 688 511 838 439 114 693 2,556 7,033 9,276 9,881
Non-Financial Public Sector 78 5 448 98 46 424 189 4 348 1,214 2,855 3,528 3,272
Financial Public Sector 32 0 149 33 209 38 82 108 40 303 994 3,636 3,751
Private 159 12 311 557 256 376 168 2 304 1,039 3,184 2,112 2,858
Amortizations 5,571 8,446 8,839 10,046 10,368 7,474 5,101 2,806 6,157 18,043 82,851 58,402 58,711
FX 2,197 2,296 4,392 6,149 5,979 2,540 2,192 1,701 3,143 6,608 37,198 22,695 29,449
Non-Financial Public Sector 347 553 2,138 208 628 222 277 96 111 301 4,882 2,429 144
Financial Public Sector 88 303 145 312 103 307 59 - - - 1,317 293 9,630
IFI (non-IMF) 186 82 271 132 1,777 168 186 66 273 460 3,601 2,996 2,990
Private LETES 1,575 1,344 1,292 1,941 1,750 1,843 1,668 1,503 2,197 5,283 20,398 10,273 10,273
Private Other 1 14 546 3,555 1,720 - 1 35 562 564 7,001 6,703 6,413
AR$ 3,373 6,150 4,447 3,897 4,389 4,934 2,909 1,106 3,014 11,436 45,654 35,708 29,262
Non-Financial Public Sector 1,313 151 1,317 1,293 107 1,020 23 29 90 1,733 7,074 2,771 1,131
Financial Public Sector 795 2,236 2,010 904 909 1,161 867 1 242 5,942 15,069 12,162 12,596
Private LECAP/LECER/LELINK 1,245 2,463 832 1,683 2,861 1,724 1,988 1,071 2,660 3,716 20,243 14,048 14,048
Private Other 20 1,300 289 16 512 1,029 31 4 22 45 3,267 6,727 1,487
IMF Debt Service - 207 - - 272 - - 367 - 367 1,212 2,011 6,038
of which: Amortization - - - - - - - - - - - - 3,715
Total Needs 6,372 8,578 10,589 11,771 11,570 9,800 6,903 2,556 7,371 26,605 102,113 75,299 79,274
Deposit drawdown (- = accumulation) 473 440 13 (4,799) 5,527 (3,087) 1,971 465 (3,855) 7,905 5,054 (3,446) (764)
IFIs - - 533 - 470 250 500 - 880 900 3,533 2,996 2,990
Public Sector 1/ 2,621 3,248 6,147 2,930 1,916 3,148 1,565 131 805 9,614 32,124 22,250 27,868
Private Sector Issuances 3,277 4,889 3,897 2,720 3,656 4,029 2,866 1,960 4,081 7,206 38,581 49,579 47,220
FX LETES 1,941 1,397 964 979 1,977 1,525 1,251 1,128 1,648 3,962 16,772 10,273 10,273
Peso LECAPs/LECER/LELINK 1,336 3,491 683 1,741 1,679 2,504 1,491 803 1,995 2,787 18,510 14,048 14,048
FX Other - - 2,250 - - - 1 27 422 423 3,123 10,868 18,413
Peso Other - - - - - - 123 3 16 34 176 14,391 4,487
Total Sources 6,371 8,577 10,589 851 11,569 4,340 6,903 2,556 1,911 25,625 79,292 71,379 77,314
Total Gap 0 0 0 10,920 0 5,460 0 0 5,460 980 22,820 3,920 1,960
FX 0 (0) (0) 10,920 (0) 2,622 0 0 4,841 (3,388) 14,996 9,927 2,266
Peso 0 0 0 0 0 2,838 (0) (0) 619 4,368 7,826 (6,007) (306)
Memo Items:
IMF Disbursements - - - 10,920 - 5,460 - - 5,460 980 22,820 3,920 1,960
Deposit Stock (total) 8,565 7,479 6,331 10,363 6,305 9,499 7,405 6,823 10,542 2,398 2,398 5,329 5,379
Private Rollover Rates 122% 111% 114% 38% 53% 88% 75% 81% 131% 147%
1/ Assumes that both financial and non-financial public sector roll over 100 percent of amortizations. In addition, non-financial public sector capitalizes interest.
ARGENTINA
37
38
ARGENTINA
INTERNATIONAL MONETARY FUNDS
Table 9. Argentina: External Gross Financing Needs and Sources (US$mn)
2018 2019
2018 (Sep-Dec) 2019 2020 2021
September Q4
3rd Rev Q1 Q2 Q3 Q4 3rd Rev
Imports G&S 7,339 22,794 30,133 30,123 16,658 18,346 18,933 19,373 73,311 77,547 76,127 83,803
Debt Service 2,071 5,101 7,173 7,173 2,441 4,986 2,828 3,728 13,984 15,722 15,756 16,370
Public Sector 383 3,413 3,796 3,796 1,642 2,920 2,422 3,470 10,455 11,626 11,874 12,100
Private Sector 1,689 1,689 3,377 3,377 799 2,066 406 258 3,529 4,096 3,882 4,270
Amortizations 3,447 19,366 22,813 22,813 22,691 23,379 9,095 7,834 62,999 33,895 51,914 61,902
Public Sector 2,343 13,524 15,868 15,868 8,886 14,668 7,036 6,608 37,198 31,392 22,695 33,164
of which: to private creditors 1,693 9,191 10,884 10,884 4,773 10,810 5,968 5,847 27,398 22,689 16,976 16,685
Private Sector 1,103 1,709 2,812 2,812 13,805 8,711 2,059 1,226 25,801 2,502 29,219 28,738
LEBAC to Non-Residents - 4,133 4,133 4,133 - - - - - - - -
Other outflows (net) 1,532 (11,537) (10,005) (10,381) 96 7,880 6,114 5,676 19,766 7,505 1,627 (4,500)
Total Needs 14,389 35,725 50,113 49,727 41,886 54,592 36,970 36,611 170,059 134,669 145,423 157,575
Exports G&S 6,061 18,184 24,245 24,370 19,137 22,044 20,187 19,380 80,749 84,165 83,024 87,172
FDI 195 5,412 5,607 4,343 1,440 1,265 899 4,024 7,628 1,959 8,714 9,911
IFIs - 1,017 1,017 1,017 533 720 1,380 900 3,533 3,533 2,996 2,990
Private Sector Rollover and Issuances 2,533 3,039 5,572 5,572 14,604 10,778 2,465 1,484 29,330 4,506 33,101 33,008
LEBAC rollovers of Non-Residents 0 0 - - 0 0 0 0 - - - -
Public Sector Rollover and Issuances 1,479 11,327 12,806 12,806 6,552 4,481 4,476 4,385 19,895 14,394 19,895 28,685
Reserve Drawdown (- = accumulation) 4,096 (16,670) (12,574) (11,820) (381) (1,076) 2,103 5,458 6,104 3,293 (6,228) (6,152)
Total Sources 14,364 22,310 36,673 36,288 41,886 38,212 31,510 35,631 147,239 111,849 141,503 155,614
Gap 25 13,415 13,440 13,440 (0) 16,380 5,460 980 22,820 22,820 3,920 1,960
Table 10. Argentina: Schedule of Reviews and Purchases
Amounts
Available on or after SDR millions % Quota Conditions 1/
June 20, 2018 10,613.71 333% Approval of Arrangement

October 26, 2018 4,100.00 129% First Review and end-September 2018 performance criteria
December 15, 2018 5,500.00 173% Second Review and end-October 2018 performance criteria
March 15, 2019 7,800.00 245% Third Review and end-December 2018 performance criteria
June 15, 2019 3,900.00 122% Fourth Review and end-March 2019 performance criteria
September 15, 2019 3,900.00 122% Fifth Review and end-June 2019 performance criteria
December 15, 2019 700.04 22% Sixth Review and end-September 2019 performance criteria
March 15, 2020 700.04 22% Seventh Review and end-December 2019 performance criteria
June 15, 2020 700.04 22% Eighth Review and end-March 2020 performance criteria
September 15, 2020 700.04 22% Ninth Review and end-June 2020 performance criteria
December 15, 2020 700.04 22% Tenth Review and end-September 2020 performance criteria
March 15, 2021 700.04 22% Eleventh Review and end-December 2020 performance criteria
June 1, 2021 700.05 22% Twelfth Review and end-March 2021 performance criteria
Total 40,714 1277%

1/ Apart from periodic performance criteria, conditions also include continuous performance criteria.
ARGENTINA
39
Table 11. Argentina: Quantitative Performance Criteria and Indicative Targets 1/2/
40
ARGENTINA
(In billions of Argentine pesos unless otherwise stated)
2019
end-Mar end-Apr end-May end-Jun end-Jul end-Aug end-Sep end-Oct end-Nov end-Dec
Proposed
PC Adjusted Actual IT Actual IT Actual PC Adjusted Actual Status IT IT PC IT IT Proposed PC
Revised PC
Fiscal targets
Performance Criteria
1. Primary balance of the federal government (floor) 3/ 9/ 6.0 6.0 10.5 n.a. n.a. n.a. n.a. 20.0 n.a. n.a. n.a. 60.0 70.0 n.a. n.a. 0.0
2. Federal government accumulation of external debt payment arrears (ceiling) 4/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Met 0.0 0.0 0.0 0.0 0.0 0.0 0.0
3. Federal government accumulation of domestic arrears (ceiling) 5/ 30.0 5.6 n.a. n.a. n.a. n.a. 45.0 n.a. n.a. n.a. 53.2 53.2 n.a. n.a. 58.5
4. Social assistance spending (floor) 3/ 60.0 72.7 n.a. n.a. n.a. n.a. 132.0 n.a. n.a. n.a. 205.0 223.5 n.a. n.a. 325.0
Indicative targets
5. Primary balance of the general government (floor) 3/ 9/ -14.0 -14.0 78.0 n.a. n.a. n.a. n.a. 10.0 n.a. n.a. n.a. 80.0 95.0 n.a. n.a. 30.0
Monetary targets
6. Change in non-borrowed net international reserves (floor) 6/ 9/ 10/ 12.5 4.4 5.5 9.0 10.5 6.2 3.8 9.0 0.7 4.0 Met 8.4 8.2 13.1 13.1 11.5 10.5 9.8
7. Change in stock of non-deliverable FX forwards (ceiling) 6/ -1.0 -3.3 -1.2 -2.6 -1.5 -5.2 -1.7 -6.6 Met 0.0 0.0 -2.6 0.0 0.0 0.0 0.0
8. Change in central bank credit to government (ceiling) 7/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Met 0.0 0.0 0.0 0.0 0.0 0.0 0.0
9. Central bank financing of the government (ceiling) 4/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Met 0.0 0.0 0.0 0.0 0.0 0.0 0.0
10. Change in net domestic assets of the central bank (ceiling) 8/ 9/ -185.6 -154.5 -212.6 - - - - - - - - - - - - - -
11. Change in monthly average monetary base (ceiling) 11/ - - - 0.0 -18.4 0.0 -0.6 0.0 -1.1 Met 0.0 -18.0 0.0 -33.0 -45.0 -45.0 38.0
1/ Targets as defined in the Technical Memorandum of Understanding (TMU).
2/ Based on program exchange rates defined in the TMU.
3/ Cumulative flows from January 1 through December 31.
4/ Continuous performance criterion.
5/ The accumulation is measured against the average during Q4 2017, which stood at 45.6 billion pesos.
6/ In billions of U.S. dollars. The change is measured against the value on September 28, 2018 which stood at US$3.6 billion.
7/ The change is measured against the value on September 28, 2018, which stood at 2,592.86 billion pesos.
8/ The change is measured against the average value for September 2018, which was AR$ 574 billion.
9/ Targets subject to adjustors as defined in the TMU.
10/ Increases reflect IMF disbursements, which increase NIR.
11/ The change is measured against the average value for February 2019, which was AR$1,343 billion.
ARGENTINA
Table 12. Argentina: Structural Program Conditionality

Implementation
Structural Benchmarks Timing
status
Publish a regulation to introduce a foreign exchange auction for BCRA intervention in the spot and forward
1 Jun-2018 Met
markets.
Not met.
Establish a senior-level debt management coordinating committee between Treasury-Finance-BCRA that
2 Sep-2018 Implemented with
would meet weekly and coordinate activities linked to sterilization and debt issuance plans.
one day delay.
Present a three-year budget document to Congress, with transparent medium-term objectives for the Not met.
3 primary balance, that are consistent with the parameters of the program. The budget would include details Oct-2018 Implemented with
on realistic and prudent macroeconomic assumptions underlying the medium-term budget. delay.
4 Congress will pass the 2019 Budget targeting a zero primary balance. Nov-2018 Met
Not met.
Congress will pass the revenue legislation underpinning the 2019 fiscal plan, including the increase in rate
5 Nov-2018 Implemented with
and base of the wealth tax (Impuesto sobre los Bienes Personales)
delay.
Publish a debt management strategy with the goal of on increasing the predictability, pricing, and liquidity
6 Dec-2018 Met
of treasury issuances
Provide sufficient resources to the newly created CBO (Oficina de Presupuesto del Congreso), so that it can
effectively evaluate macroeconomic and budgetary forecasts (including those contained in the annual
7 Dec-2018 Met
budget and MTFF), provide independent costing to Congress of new policy initiatives, assess the
government’s fiscal plans (including the annual budget), and monitoring public finances at the central level.
8 Limit the BCRA’s counterparties for sale of LEBACs, open market operations and repos to domestic banks. Mar-2019 Met
Submit to Congress a new charter for the central bank that will ensure operational autonomy, strengthen the
9 BCRA’s monetary policy mandate, enhance decision-making structures, and buttress transparency and Mar-2019 Met
accountability
Design a compliance improvement plan and risk mitigation strategies around taxpayer segments, taxpayer
10 Jun-2019 Met
obligations, and core taxes.
Finalize a time-bound plan for transferring the Treasury Single Account (TSA) from Banco Nacion to the BCRA in
11 June 2020. The plan will include all operational details of the new TSA at the BCRA, the timeline for the transfer Sep-2019
process, and a deleveraging plan for Banco Nacion.
Recapitalize the central bank to ensure it has the adequate level of capital as percent of the monetary base
12 Dec-2019
plus the outstanding stock of LEBACs.
Implement an integrated auditing action plan for the Simplified Taxpayer Regime (Monotributo), covering 20
13 Dec-2019
percent of taxpayers under this regime.

42
Table 13. Argentina: Indicators of Fund Credit
ARGENTINA
(In millions of SDRs, unless otherwise specified)
2018 2019 2020 2021 2022 2023 2024 2025 2026
Existing and Prospective drawings (36 month SBA) 20,214 16,300 2,800 1,400 … … … … …
(in percent of quota) 634 511 88 44
(Projected Debt Service to the Fund based on Existing and Prospective Drawings) 1/
Amortization 1/ 0.0 0.0 0.0 2,653.4 13,031.9 16,128.5 7,062.6 1,575.1 262.5
GRA charges and surcharges 1/ 110.1 580.3 1,392.5 1,620.7 1,585.4 797.7 152.8 27.7 2.9
GRA service charge 1/ 101.1 42.5 14.0 7.0 0.0 0.0 0.0 0.0 0.0
SDR assessments 1/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total debt service 1/ 211.2 622.7 1,406.6 4,281.2 14,617.3 16,926.3 7,215.5 1,602.9 265.4
(in percent of exports of G&S) 0.4 1.1 2.4 7.0 23.0 24.8 9.8 2.0 0.3
(in percent of GDP) 0.1 0.2 0.4 1.1 3.5 3.7 1.5 0.3 0.0
(in percent of GIR) 0.5 1.5 3.1 8.5 26.9 28.9 11.2 2.3 0.3
(Projected Level of Credit Outstanding based on Existing and Prospective Drawings) 1/
Outstanding stock 1/ 20,213.7 36,513.8 39,313.9 38,060.6 25,028.7 8,900.2 1,837.6 262.5 0.0
(in percent of quota) 634.2 1,145.6 1,233.5 1,194.1 785.3 279.2 57.7 8.2 0.0
(in percent of GDP) 5.6 10.9 10.9 9.7 5.9 2.0 0.4 0.1 0.0
(in percent of GIR) 44.0 87.5 85.3 75.5 46.1 15.2 2.9 0.4 0.0
Memorandum items:
Exports of goods and services (US$ mn) 75,766 80,749 83,024 87,172 90,859 97,801 105,274 113,317 121,975
US$/SDR exchange rate 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4
Gross International Reserves (US$ mn) 65,806 59,702 65,930 72,082 77,610 83,712 91,782 100,630 110,331
Quota 3,187.3 3,187.3 3,187.3 3,187.3 3,187.3 3,187.3 3,187.3 3,187.3 3,187.3
Source: Fund staff estimates.
1/ Assumes that all purchases will be made.
Table 14. Argentina: External Debt Sustainability Framework
(Percent of GDP, unless otherwise indicated)
Actual Projections
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt-stabilizing
non-interest
current account 6/
Baseline: External debt 30.3 27.9 34.1 37.0 52.2 58.7 52.3 49.9 47.1 44.1 44.5 -3.5
Change in external debt 1.3 -2.4 6.2 2.9 15.2 6.5 -6.4 -2.5 -2.8 -3.0 0.4
Identified external debt-creating flows (4+8+9) 3.5 -2.7 6.5 -1.7 12.0 0.8 -0.6 -1.2 -1.4 -1.5 -1.2
Current account deficit, excluding interest payments 0.9 2.2 1.8 3.7 2.9 -0.3 0.3 1.1 1.7 2.0 2.5
Deficit in balance of goods and services -0.2 1.0 0.7 2.4 2.0 -1.6 -1.3 -0.6 0.0 0.2 0.6
Exports 14.5 10.9 12.8 11.4 14.1 17.5 16.1 15.6 15.1 15.1 15.6
Imports 14.4 11.9 13.6 13.9 16.1 15.9 14.8 15.0 15.0 15.3 16.1
Net non-debt creating capital inflows (negative) -0.6 -1.7 -0.4 -2.1 -1.8 -1.7 -1.7 -1.8 -1.9 -2.0 -2.1
Automatic debt dynamics 1/ 3.2 -3.1 5.1 -3.3 11.0 2.8 0.7 -0.5 -1.3 -1.5 -1.6
Contribution from nominal interest rate 0.8 0.6 0.9 1.2 2.4 2.0 1.3 0.7 0.3 0.1 -0.1
Contribution from real GDP growth 0.8 -0.7 0.7 -0.8 1.1 0.8 -0.6 -1.3 -1.6 -1.6 -1.5
Contribution from price and exchange rate changes 2/ 1.7 -3.0 3.6 -3.7 7.5 ... ... ... ... ... ...
Residual, incl. change in gross foreign assets (2-3) 3/ -2.2 0.3 -0.3 4.6 3.2 5.7 -5.7 -1.2 -1.3 -1.5 1.6
External debt-to-exports ratio (in percent) 208.2 255.5 265.7 323.4 370.5 335.3 324.9 320.3 312.3 291.1 285.6
Gross external financing need (in billions of US dollars) 4/ 85.8 82.6 81.7 104.9 97.7 108.3 91.9 89.5 111.1 114.1 117.1
in percent of GDP 15.3 12.9 14.7 16.3 18.2 10-Year 10-Year 24.8 22.8 20.7 23.8 22.6 21.6
Scenario with key variables at their historical averages 5/ 60.5 56.8 56.6 55.8 54.4 54.6 -2.5
Historical Standard
Key Macroeconomic Assumptions Underlying Baseline Average Deviation
Real GDP growth (in percent) -2.5 2.7 -2.1 2.7 -2.5 1.0 4.7 -2.5 -1.3 1.1 2.6 3.4 3.6
GDP deflator in US dollars (change in percent) -5.4 10.9 -11.4 12.3 -16.8 3.4 11.8 -16.8 -6.5 6.3 5.3 4.4 3.6
Nominal external interest rate (in percent) 2.4 2.2 2.7 4.2 5.2 2.8 1.1 5.2 3.6 2.4 1.5 0.7 0.3
Growth of exports (US dollar terms, in percent) -8.7 -14.4 1.9 2.8 3.2 0.0 13.3 3.2 6.6 2.8 5.0 4.2 7.6
Growth of imports (US dollar terms, in percent) -10.4 -5.3 -1.6 18.0 -3.0 4.0 19.6 -3.0 -15.0 3.7 10.1 8.1 9.2
Current account balance, excluding interest payments -0.9 -2.2 -1.8 -3.7 -2.9 -0.9 2.0 0.3 -0.3 -1.1 -1.7 -2.0 -2.5
Net non-debt creating capital inflows 0.6 1.7 0.4 2.1 1.8 1.6 0.8 1.7 1.7 1.8 1.9 2.0 2.1
Source: Fund staff calculations and estimates.

1/ Derived as [r - g - r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms, g = real GDP growth rate,
e = nominal appreciation (increase in dollar value of domestic currency), and a = share of domestic-currency denominated debt in total external debt.
2/ The contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock. r increases with an appreciating domestic currency (e > 0) and rising inflation (based on GDP deflator).
3/ For projection, line includes the impact of price and exchange rate changes.
4/ Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
5/ The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
6/ Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain at their levels
of the last projection year.
ARGENTINA
43
ARGENTINA
Figure 6. External Debt Sustainability: Bound Tests 1/ 2/

(External debt in percent of GDP)
Baseline and Historical Scenarios Interest Rate Shock

100 50 100
90 45 90
80 40
80
70 35
Baseline i-rate
60 30 70
shock
Historical 44
50 55 25 60
51
40 20
50
30 15 Baseline
40
20 10 44
10 5 30
0 0 20
2014 2016 2018 2020 2022 2024 2014 2016 2018 2020 2022 2024
Growth Shock Non-Interest Current Account Shock

100 100
90 90
80 80
Growth 70
70
shock CA shock
59
60 56 60
50 50
Baseline Baseline
40 44 40 44
30 30
20 20
2014 2016 2018 2020 2022 2024 2014 2016 2018 2020 2022 2024
Combined Shock 3/ Real Depreciation Shock 4/

100 100
30 %
90 90 depreciation
80 80
73
Combined
70 shock 70
60 54 60
50 50
Baseline Baseline
40 44 40 44
30 30
20 20
2014 2016 2018 2020 2022 2024 2014 2016 2018 2020 2022 2024
Source: Fund staff calculations and estimates.

1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures
in the boxes represent average projections for the respective variables in the baseline and scenario being presented.
Ten-year historical average for the variable is also shown.
2/ For historical scenarios, the historical averages are calculated over the ten-year period, and the information is
used to project debt dynamics five years ahead.
3/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.
4/ One-time real depreciation of 30 percent occurs in 2018.

ARGENTINA
Annex I. Public Debt Sustainability Analysis

This debt sustainability analysis (DSA) provides an update to the findings in the Argentina: Third
Review Under the Stand-By Arrangement. After reaching 86 percent of GDP in 2018, federal
government debt is projected to start declining from 2019 and fall to around 60 percent of GDP in the
medium term. Important downside risks to this path remain, including, economic and financial
conditions not improving as envisaged in the baseline; the increased possibility of market turbulence in
the pre-election period; the structurally high share of foreign currency denominated debt; elevated
fiscal and external financing needs; and potential contingent liabilities. The program remains fully
financed. Staff’s overall assessment is that Argentina’s debt is sustainable, but not with a high
probability.
A. Background
1. Stock. By end-December 2018, gross federal government debt (including intra-public-sector

holdings) stood at an estimated AR$12,560 billion (US$332 billion), up from AR$6,030 billion
(US$321 billion) at end 2017. In percent of GDP, federal government debt increased from 58 percent
in 2017 to 86 percent by end-2018. Over two-thirds of this increase was driven by the depreciation
of the peso, which ended 2018 at AR$37.8/US$ while it was at AR$18.8/US$ at end-2017). Other
drivers of the increase in debt include: the issuance of the fiscal pact bonds for provinces, boosting
of reserves using IMF BOP support, and deposit accumulation. Preliminary debt estimates for
end-April 2019 point to gross federal government debt having remained broadly constant in the
first 4 months of the year (at around US$334 billion).
Total Public Debt Fiscal Pact Bonds 1/ Public Debt Composition

(Billions of AR$) (billions of U.S. Dollars)
14 Prefinancing from IFI 350
& BOP Support 2/ Priv - Bonds FX
12
Deposit increase 300 Priv - Bonds AR$
10
8 Interest payments 250 Priv - T-bills FX
6 Priv - T-Bills AR$

Primary Deficit 200
4 Pub - FX
Valuation 150
2 Pub - AR$
Total end-Year Debt 100
- Foreign Official
end-2017 end-2018 50
Source: IMF Staff calculations. 1/ It also includes Capitalizations
and Letras en Garantia. 2/ Includes disbursements from IFIs that 0
pre-finance primary expenditures in the year after and US$7.5 of end-2018 end-April 2019
IMF BOP support.
2. Currency Composition. The FX-denominated portion of debt has gone up from around
68 percent in end-2017 to about 76 percent by end-2018, driven by the (i) the US$9 billion external
bond placement in January 2018, (ii) about US$28 billion in IMF disbursements, and (iii) currency
depreciation. The stock of short-term treasury bills in private hands is around US$23 billion,
42 percent of which are FX denominated.

ARGENTINA
3. Maturity. The average weighted maturity of federal public debt at end-2018 stood at
9.0 years. Among privately held debt, the weight average maturity is higher, at 12.9 years.
4. Debt Holders. About 35 percent of the federal government’s debt is held by other
public-sector entities and provinces. Nearly 70 percent of this intra-public-sector debt is
denominated in US$, and within this, the majority are low-interest Letras Intransferibles held by the
BCRA. Debt to IFIs (including the IMF) and bilateral creditors has increased from about 9 percent of
total debt to 17 percent of total debt. Between end-2018 and end-April 2019, debt held by the
private sector remained broadly constant at US$146 billion.
B. Baseline Scenario
5. Debt is expected to decline to around 77 percent of GDP in 2019 as a result of projected

appreciation as the currency unwinds some of the overshooting in 2018 and somewhat less negative
growth. Debt is expected to decline gradually to 60 percent of GDP by 2024. Gross financing needs
(GFN) are expected to breach 15 percent of GDP in 2019 but remain below the threshold during the
rest of the projection period. This projection is based on the following assumptions:
• Growth and Inflation. Growth in 2019 is expected to be at -1.3 percent – somewhat less
negative than in 2018 as the economy begins to recover – and then grow by 1.1 percent in 2020.
Growth will then rise gradually to 3.6 percent by 2023 and remain there in 2024. Inflation is
expected to continue to erode the real value of long-maturity, peso-denominated debt.
• Primary Deficit. The fiscal consolidation throughout the period will help reduce the
accumulation of debt going forward.
• Exchange Rate. The projected real peso appreciation in 2019 will improve debt dynamics. Staff
expects that the real depreciation in 2018 will continue to unwind during the program period.
6. The financing assumptions for 2019 underlying the program have been revised due to
shortening of maturities.
• Higher than expected rollovers in Q4 2018 and Q1 2019 at less than 1-year maturities, recent
shortening of maturities in April/May (LECAPS at 3 months and LETES at 2 to 3 months),
together with the projected repayment for a credit line with Banco Nación in December, have
increased financing needs for 2019 and 2020. In order to ensure that the program remains fully
financed, rollover rates for the remainder of 2019 have been raised to 75 percent, under the
baseline assumptions which are in line with authorities’ debt strategy for 2019 (¶28/29).
• Continued rollover of intra-public-sector financing is assumed, together with the capitalization

of interest payments by non-financial public sector. Statutory advances from the BCRA are zero.
No international bond issuance is expected until 2020. The IMF will continue to play a key role in
financing the federal government in 2019.

ARGENTINA
C. Shocks and Stress Tests
Solvency Risks
• Given the high share of foreign currency denominated debt, a shock to the exchange rate
remains a major vulnerability. The standard DSA stress test (50 percent real depreciation with
0.25 pass-through) shows that debt could jump to above 115 percent of GDP in such a scenario.
Debt is also vulnerable to a growth shock, which under the stress test could raise debt to nearly
80 percent of GDP.
• Fiscal consolidation is critical to stabilizing the debt level. If the primary balance were to remain
unchanged at its 2018 level, debt would remain largely flat, at 84 percent of GDP by 2024. A
‘combined macro-fiscal’ shock would cause debt to peak at 160 percent of GDP. 1
Liquidity Risks
• A combined macro-fiscal shock will lead to GFN of 36 percent of GDP. In such a scenario, it may
not be possible to finance this through market access on favorable terms.
D. Overall Assessment
7. Debt dynamics under the baseline remain benign. The fiscal adjustment, economic
recovery, and lower real interest rates (as central bank credibility is established) will all work to
maintain public debt-to-GDP on a steady downward trajectory from 2019 onwards. Debt would fall
under the planned fiscal consolidation to 60 percent of GDP by end-2024.
8. There are significant risks to debt sustainability. The most evident near-term risks are
linked to:
• The size of the gross financing needs under a stressed scenario, which have increased in the
short term due to the shortening of maturities in April and May;
• The possibility of bouts of market turbulence in the pre-election period which could translate
into higher sovereign spreads and a depreciation of the peso;
• The large share of foreign currency debt (which makes Argentina’s debt dynamics sensitive to
real exchange rate movements);
• The large external financing needs of the economy, which in past emerging market crises has
shown to be a strong predictor of a debt crisis;
1
This involves: (i) a one-standard deviation shock to growth, with the corresponding automatic stabilizers and lower
inflation; (ii) a 50 percent real depreciation, with 0.25 pass-through to inflation; and (iii) 200bps shock to interest
rates.

ARGENTINA
• The fact that the fiscal consolidation path is ambitious relative to similar country situations (it is
in the top 5 percent of the distribution of fiscal consolidations achieved by a broad sample of
program countries);
• The DSA covers only federal government debt and so could understate the sustainability of
general government debt. However, most provinces are running close to a balanced budget and
provincial debt at end-2017 was projected to be around 6 percent of GDP.
• The national government faces contingent liabilities from needing to recapitalize the central
bank and unfunded pensions. The national government also faces contingent liabilities from
court settlements with provinces in the context of the Fiscal Pact (potentially around 0.2 percent
of GDP).
These risks are, however, mitigated by the high share of federal government debt that is held by
classes of investors, including domestic financial institutions, retail investors and other public-sector
entities, who are expected to continue investing in Argentina debt even amid stressed conditions;
the relatively long maturity of dollar-denominated debt issued on international markets; and
Argentina’s demonstrated ability to recover from temporary shifts in market confidence, as
evidenced by the rebound in rollover rates and maturities in June, after the market tantrum in April.

ARGENTINA
Figure 1. Argentina: Public DSA Risk Assessment

Heat Map
Debt level
1/ Real GDP Primary Balance Real Interest Exchange Rate Contingent
Growth Shock Shock Rate Shock Shock Liability shock
Real GDP Primary Balance Real Interest Exchange Rate Contingent

Gross financing needs 2/
Growth Shock Shock Rate Shock Shock Liability Shock
External Change in the Public Debt Foreign

3/ Market
Debt profile Financing Share of Short- Held by Non- Currency
Perception
Requirements Term Debt Residents Debt
Evolution of Predictive Densities of Gross Nominal Public Debt

(in percent of GDP)
Baseline Percentiles: 10th-25th 25th-75th 75th-90th
Symmetric Distribution Restricted (Asymmetric) Distribution

100 120
90
100
80
70 80
60
50 60
40
40 Restrictions on upside shocks:
30
no restriction on the growth rate shock
20 20 no restriction on the interest rate shock
10 0 is the max positive pb shock (percent GDP)
no restriction on the exchange rate shock
0 0
2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024
Debt Profile Vulnerabilities

(Indicators vis-à-vis risk assessment benchmarks, in 2018)
Argentina Lower early warning Upper early warning
728 22%
76%
bp 49%
600 15 1 45 60
200 5 0.5 15 20
1 2 1 2 1 2 1 2 1 2
-3.1%
Annual Change in
External Financing Public Debt Held by Public Debt in
EMBIG Short-Term Public
Requirement Non-Residents Foreign Currency
Debt
(in basis points) 4/ (in percent of GDP) 5/ (in percent of total) (in percent of total) (in percent of total)
Source: IMF staff.

1/ The cell is highlighted in green if debt burden benchmark of 70% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not baseline,
red if benchmark is exceeded under baseline, white if stress test is not relevant.
2/ The cell is highlighted in green if gross financing needs benchmark of 15% is not exceeded under the specific shock or baseline, yellow if exceeded under specific shock but not
baseline, red if benchmark is exceeded under baseline, white if stress test is not relevant.
3/ The cell is highlighted in green if country value is less than the lower risk-assessment benchmark, red if country value exceeds the upper risk-assessment benchmark, yellow if
country value is between the lower and upper risk-assessment benchmarks. If data are unavailable or indicator is not relevant, cell is white.
Lower and upper risk-assessment benchmarks are:
200 and 600 basis points for bond spreads; 5 and 15 percent of GDP for external financing requirement; 0.5 and 1 percent for change in the share of short-term debt; 15 and 45
percent for the public debt held by non-residents; and 20 and 60 percent for the share of foreign-currency denominated debt.
4/ EMBIG, an average over the last 3 months, 18-Jan-19 through 18-Apr-19.
5/ External financing requirement is defined as the sum of current account deficit, amortization of medium and long-term total external debt, and short-term total external debt at
the end of previous period.

50
ARGENTINA
Figure 2. Argentina: Public DSA - Realism of Baseline Assumptions

Forecast Track Record, Versus all countries
Real GDP Growth Primary Balance Inflation (Deflator)
(in percent, actual-projection) (in percent of GDP, actual-projection) (in percent, actual-projection)
Argentina median forecast error, 2009-2017: -1.10 Argentina median forecast error, 2009-2017: -1.21 Argentina median forecast error, 2009-2017: 3.51
Has a percentile rank of: 22% Has a percentile rank of: 22% Has a percentile rank of: 98%
10 6 20
pessimistic
8 4 15
6
2
4 10
2 0
5
0 -2 Distribution of forecast
Distribution of forecast Distribution of forecast
optimistic
-2 errors: 1/ errors: 1/ 0 errors: 1/

-4
-4 Distribution of forecast errors: Distribution of forecast errors: Distribution of forecast errors:
-6 Median -5
-6 Median Median
Argentina forecast error Argentina forecast error Argentina forecast error
-8 -8 -10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year 2/ Year 2/ Year 2/
Assessing the Realism of Projected Fiscal Adjustment Boom-Bust Analysis 3/

3-Year Adjustment in Cyclically-Adjusted 3-Year Average Level of Cyclically-Adjusted Primary Real GDP growth
Primary Balance (CAPB) Balance (CAPB) (in percent)
(Percent of GDP) (Percent of GDP) Argentina
14 12 8
Distribution 4/ 3-year CAPB adjustment Distribution 4/ 3-year average CAPB level
12 Argentina greater than 3 percent of GDP 10 Argentina greater than 3.5 percent of 6
has a percentile in approx. top quartile has a percentile GDP in approx. top quartile
10 rank of 4% rank of 63% 4
8
8 2 Not applicable for Argentina
6
6 0
4
4 -2
2 2
-4
0 0 -6
More
More
Less
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
Less
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
t-5 t-4 t-3 t-2 t-1 t t+1 t+2 t+3 t+4 t+5
Source : IMF Staff.

1/ Plotted distribution includes all countries, percentile rank refers to all countries.
2/ Projections made in the spring WEO vintage of the preceding year.
3/ Not applicable for Argentina, as it meets neither the positive output gap criterion nor the private credit growth criterion.
4/ Data cover annual obervations from 1990 to 2011 for advanced and emerging economies with debt greater than 60 percent of GDP. Percent of sample on vertical axis.
ARGENTINA
Figure 3. Argentina: Public Sector Debt Sustainability Analysis (DSA)

(in percent of GDP unless otherwise indicated)
Debt, Economic and Market Indicators 1/
Actual Est. Projections As of July 01, 2019
2/
2008-2016 2017 2018 2019 2020 2021 2022 2023 2024 Sovereign Spreads
Nominal gross public debt 47.3 57.1 86.1 76.9 70.1 64.6 62.6 61.3 60.0 EMBIG (bp) 3/ 811
Public gross financing needs 5.0 13.3 13.5 15.8 12.6 11.6 12.9 12.6 12.6 5Y CDS (bp) 971
Real GDP growth (in percent) 1.5 2.7 -2.5 -1.3 1.1 2.6 3.4 3.6 3.6 Ratings Foreign Local
Inflation (GDP deflator, in percent) 26.4 25.8 41.3 46.8 34.5 24.5 13.6 8.0 5.0 Moody's B2 B2
Nominal GDP growth (in percent) 28.2 29.4 37.2 45.4 35.8 27.9 17.4 12.0 8.9 S&Ps B B
Effective interest rate (in percent) 4/ 4.5 8.9 10.8 5.5 8.3 10.6 10.9 9.3 8.8 Fitch B B
Contribution to Changes in Public Debt

Actual Projections
2008-2016 2017 2018 2019 2020 2021 2022 2023 2024 cumulative debt-stabilizing
Change in gross public sector debt -1.0 4.1 28.9 -9.2 -6.7 -5.5 -2.0 -1.3 -1.2 -26.0 primary
Identified debt-creating flows -7.6 1.1 25.1 -22.5 -16.6 -10.5 -4.6 -2.6 -1.3 -58.0 balance 9/
Primary deficit -3.8 3.8 2.7 0.3 -1.0 -1.0 -1.0 -1.0 -1.4 -5.0 1.7
Primary revenue and grants 26.0 25.9 25.2 25.4 26.6 26.3 26.6 26.4 26.6 157.9
Primary (noninterest) expenditure 22.2 29.7 27.8 25.7 25.6 25.3 25.6 25.4 25.3 152.8
Automatic debt dynamics 5/ -3.8 -2.7 18.1 -23.4 -15.6 -9.5 -3.6 -1.5 0.0 -53.5
Interest rate/growth differential 6/ -8.8 -8.3 -12.4 -23.4 -15.6 -9.5 -3.6 -1.5 0.0 -53.5
Of which: real interest rate -8.2 -7.2 -13.4 -24.2 -15.0 -8.0 -1.7 0.5 2.1 -46.3
Of which: real GDP growth -0.6 -1.1 1.0 0.8 -0.6 -1.4 -1.9 -2.0 -2.0 -7.2
Exchange rate depreciation 7/ 5.0 5.6 30.5 … … … … … … …
Other identified debt-creating flows 0.0 0.0 4.4 0.6 0.0 0.0 0.0 0.0 0.0 0.6
Privatization receipts (negative) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contingent liabilities 0.0 0.0 2.5 0.6 0.0 0.0 0.0 0.0 0.0 0.6
Prefinancing from IFIs and BOP Support 10/ 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Residual, including asset changes 8/ 6.6 2.9 3.8 13.3 9.9 4.9 2.6 1.2 0.1 32.0
50 40
Debt-Creating Flows projection
40
(in percent of GDP) 20
30
0
20
10 -20
0
-40
-10
-60
-20
-30 -80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 cumulative
Primary deficit Real GDP growth Real interest rate Exchange rate depreciation
Other debt-creating flows Residual Change in gross public sector debt
Source: IMF staff.

1/ Public sector is defined as central government.
2/ Based on available data.
3/ EMBIG.
4/ Defined as interest payments divided by debt stock (excluding guarantees) at the end of previous year.
5/ Derived as [(r - π(1+g) - g + ae(1+r)]/(1+g+π+gπ)) times previous period debt ratio, with r = interest rate; π = growth rate of GDP deflator; g = real GDP growth rate;
a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
6/ The real interest rate contribution is derived from the numerator in footnote 5 as r - π (1+g) and the real growth contribution as -g.
7/ The exchange rate contribution is derived from the numerator in footnote 5 as ae(1+r).
8/ Includes asset changes, interest revenues (if any), and intra-year valuation effects. For projections, includes exchange rate changes during the projection period.
9/ Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year.
10/ Includes disbursements from IFIs that pre-finance primary expenditures in the year after and US$7.5 of IMF BOP support.

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Figure 4. Argentina: Public DSA - Composition of Public Debt and Alternative Scenarios
Composition of Public Debt
By Maturity By Currency
(in percent of GDP) (in percent of GDP)
100 100
Medium and long-term Local currency-denominated
90 90
Short-term Foreign currency-denominated
80 80
70 70
60 60
50 50
40 40 projection
30 30
projection
20 20
10 10
0 0
2008 2010 2012 2014 2016 2018 2020 2022 2024 2008 2010 2012 2014 2016 2018 2020 2022 2024
Alternative Scenarios
Baseline Historical Constant 2018 Primary Balance
Gross Nominal Public Debt Public Gross Financing Needs

(in percent of GDP) (in percent of GDP)
100 25
90
80 20
70
60 15
50
40 10
30
20 5
10 projection projection
0 0
2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024
Underlying Assumptions
(in percent)
Baseline Scenario 2019 2020 2021 2022 2023 2024 Historical Scenario 2019 2020 2021 2022 2023 2024
Real GDP growth -1.3 1.1 2.6 3.4 3.6 3.6 Real GDP growth -1.3 1.0 1.0 1.0 1.0 1.0
Inflation 46.8 34.5 24.5 13.6 8.0 5.0 Inflation 46.8 34.5 24.5 13.6 8.0 5.0
Primary Balance -0.3 1.0 1.0 1.0 1.0 1.4 Primary Balance -0.3 1.8 1.8 1.8 1.8 1.8
Effective interest rate 5.5 8.3 10.6 10.9 9.3 8.8 Effective interest rate 5.5 8.4 9.1 8.7 6.1 5.0
Constant 2018 Primary Balance Scenario
Real GDP growth -1.3 1.1 2.6 3.4 3.6 3.6
Inflation 46.8 34.5 24.5 13.6 8.0 5.0
Primary Balance -2.7 -2.7 -2.7 -2.7 -2.7 -2.7
Effective interest rate 5.5 8.7 11.6 11.9 10.0 9.3
Source: IMF staff.

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Figure 5. Argentina: Public DSA - Stress Tests

Macro-Fiscal Stress Tests
Baseline Primary Balance Shock Real Interest Rate Shock
Real GDP Growth Shock Real Exchange Rate Shock
Gross Nominal Public Debt Gross Nominal Public Debt Public Gross Financing Needs
(in percent of GDP) (in percent of Revenue) (in percent of GDP)
140 500 25
450
120
400 20
100 350
80 300 15
250
60 200 10
40 150
100 5
20
50
0 0 0
2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024
Additional Stress Tests
Baseline Combined Macro-Fiscal Shock
Gross Nominal Public Debt Gross Nominal Public Debt Public Gross Financing Needs
(in percent of GDP) (in percent of Revenue) (in percent of GDP)
180 700 40
160 600 35
140 30
500
120
25
100 400
20
80 300
15
60
200
40 10
20 100 5
0 0 0
2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024
Underlying Assumptions
(in percent)
Primary Balance Shock 2019 2020 2021 2022 2023 2024 Real GDP Growth Shock 2019 2020 2021 2022 2023 2024
Real GDP growth -1.3 1.1 2.6 3.4 3.6 3.6 Real GDP growth -1.3 -3.6 -2.1 3.4 3.6 3.6
Primary balance -0.3 -1.9 -1.8 1.0 1.0 1.4 Primary balance -0.3 -0.6 -2.1 1.0 1.0 1.4
Real Interest Rate Shock Real Exchange Rate Shock
Real GDP growth -1.3 1.1 2.6 3.4 3.6 3.6 Real GDP growth -1.3 1.1 2.6 3.4 3.6 3.6
Primary balance -0.3 1.0 1.0 1.0 1.0 1.4 Primary balance -0.3 1.0 1.0 1.0 1.0 1.4
Combined Shock
Real GDP growth -1.3 -3.6 -2.1 3.4 3.6 3.6
Inflation 46.8 33.3 23.3 13.6 8.0 5.0
Primary balance -0.3 -1.9 -2.1 1.0 1.0 1.4
Effective interest rate 5.5 12.9 8.6 9.6 9.2 9.1
Source: IMF staff.

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Appendix I. Letter of Intent
Madame Christine Lagarde

Managing Director
Washington, D.C. 20431
United States of America
July 3, 2019
Dear Madame Lagarde,
The attached Memorandum of Economic and Financial Policies (MEFP) describes the economic
objectives and policies of the Government of Argentina that have changed since the time of the
completion of the Third Review under the Stand-By Arrangement on April 5, 2019. Also attached
is an addendum to the Technical Memorandum of Understanding.
We are continuing in our steadfast implementation of the reformulated policy plan supported by
the IMF Stand-By Arrangement. After a supportive financial environment at the start of 2019,
Argentina once again was subject to considerable market volatility in March/April, as markets
reacted to stubbornly high inflation and rising political uncertainty.
In line with the understandings reached with the IMF, we have continued to meet these
challenges and adapted our policies to the new conditions. First, we announced a few changes to
the monetary policy framework that tightens the policy stance, including freezing the rate of the
crawl of the reference zone and committing not to purchase FX when the peso appreciates
outside of the zone. Then, as pressures continued to build, we announced a new FX intervention
strategy, which allows the BCRA to respond to disorderly market conditions by selling FX even
with the peso inside the reference zone. We have also increased the size of FX intervention to
lean against a depreciation of the peso outside of the reference zone. We believe these changes
have been successful to anchor exchange rate expectations and will facilitate a gradual decline of
inflation in the months ahead.
We have continued our efforts at achieving a balanced budget while ensuring that the most
vulnerable are protected against the costs of the adjustment. The primary federal fiscal balance
has been in surplus for the first five months of 2019 and we are well positioned to meet the fiscal
targets under the program. Not only have the program’s fiscal and monetary targets been over-
complied so far this year, but the external imbalance also continues to undergo a significant
correction.

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We continue to maintain a close policy dialogue with IMF staff. We remain committed to
maintaining this close collaboration, including through the sharing of data and information that
are needed to assess program implementation. Due to timing, we would request waivers of
applicability for the end-June 2019 performance criteria on the primary balance of the federal
government, domestic arrears, and social assistance spending, as the final data will not be
available at the time of the Executive Board consideration. Furthermore, we would like to request
changes to end-September quantitative performance criteria for (i) the social spending floor, (ii)
non-deliverable forwards, (iii) monetary base, and (iv) the primary balance target. The latter
serves to further lock in our commitment to fiscal discipline. Lastly, we would also request the
setting of end-December quantitative performance criteria and the board’s temporary approval
for another twelve months of the retention of the measure that gives rise to the multiple
currency practice.
This economic program has been from the outset and remains fully owned by the Argentine
government. We continue to work to build a broad consensus around its objectives and policies.
We are certain that, as the dividends of macroeconomic stability continue to yield, public and
political support for our policy plans will grow in the months ahead. Consolidating
macroeconomic stabilization will allow us to advance our agenda of structural reforms to foster
stronger, sustainable, and inclusive growth.
We believe that these policies and those set forth in the attached MEFP are adequate to achieve
the macroeconomic and financial objectives of the program. But we will take any additional
measures that may be appropriate for this purpose. We will consult with the IMF on the adoption
of these measures, and in advance of revisions to the policies contained in the MEFP, in
accordance with the IMF’s policies on such consultation.
We are fully committed to transparency in our economic policy plans. As such, we consent to the
publication of the Executive Board documents for the review as well as this letter and our
memorandum of economic and financial policies.
Your sincerely,
/s/ /s/
Nicolas Dujovne Guido Sandleris
Minister of Finance President, Central Bank of Argentina
Attachments (2)

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Attachment I. Memorandum of Economic and Financial Policies

(Update)
This memorandum supplements and updates the Memorandum of Economic and Financial
Policies (MEFP) dated March 25, 2019.
Recent Developments and Outlook
1. Economic activity remained weak in Q1 but there are signs that the recession may have
reached its bottom in the first quarter of the year. Agriculture has benefited from a historically
strong soy harvest and there are signs that the wheat and corn harvest later in the year will also
be particularly favorable. Activity will be sustained by buoyant export growth and some
rebuilding of real disposable incomes, as wages and social transfers recoup part of their
2018 losses. The trade balance is recording a surplus and the current account deficit is expected
to narrow significantly in 2019.
2. Nonetheless, monthly inflation remained stubbornly high, reflecting the impact of the
tariff increases implemented earlier in the year and the peso depreciation experienced in March.
After the better-than-expected fall of inflation in April, we remain confident that inflation will
continue to decelerate in the next few months, consistent with market expectations.
3. We have sustained five months of accumulated primary surpluses so far in 2019, for the
first time in 8 years. We have also comfortably met our fiscal target for 2019Q1, continuing the
path to fiscal prudence. At the same time, we continued to protect social spending and ensuring
that the most vulnerable do not bear the brunt of the burden of adjustment. We are conscious of
the sacrifices that the Argentine people continue to make to support the policies that are
necessary to ensure economic stability and future growth.
Fiscal Policy
4. We remain strongly committed to implementing the 2019 Budget and achieving our
fiscal targets for this year, without jeopardizing social and growth-enhancing capital spending.
With the latter goals in mind, we expect to make full use of the ½ percent of GDP in adjustors
built into the program to accommodate these high-priority expenditures. While higher-than-
expected inflation has bolstered revenues, we have also proactively introduced revenue measures
on imports to safeguard the achievement of the fiscal targets under the program. Higher interest
revenues and dividend income has also created more space for growth-enhancing capital
spending, which we plan to use conservatively over the next few months, as revenues permit.
5. Given the improved outlook, and to further solidify our commitment to fiscal prudence,
we have requested that the end-September target for the primary balance of the federal
government be revised upward to AR$70 billion (from AR$60 billion). This will allow us to lock-in
upside gains in the fiscal accounts and ensure that the deficit in the last quarter is comfortably
covered.

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6. We intend to improve the efficiency of tax collection, to ensure that the tax burden is
equitably distributed across the Argentine society. We continue to enhance the efficiency of
VAT collection and use third-party information to cross-check corporate tax returns. We have
launched a program to reduce the abuse of the monotributo regime and strengthen the large-
taxpayers’ central office. We have finalized a compliance improvement plan and risk mitigation
strategies in line with the end-June structural benchmark. By December 2019, we will implement
an integrated auditing action plan for the Simplified Taxpayer Regime, covering 20 percent of
taxpayers under this regime.
7. We continue to improve Public Financial Management (PFM). We are working to

strengthen our macro-fiscal unit at the Ministry of Finance and improving the coordination
among the units that are in charge of assessing the macroeconomic and fiscal impact of new
policy measures. We will request IMF technical support for a fiscal transparency evaluation in
2020, in line with best practices and following other Latin American economies. The findings will
provide an important roadmap for our PFM reforms going forward. We remain committed to
move the Treasury Single Account (TSA) from Banco Nación to the BCRA by June 2020 and we
have started to work on a plan that will include all operational details of the new TSA at the
BCRA, the timeline for the transfer process, and a deleveraging plan for Banco Nación.
8. We are committed to improve the governance and risk-management practices of the

existing Public-Private Partnership (PPP) framework. To reduce possible conflicts of interest and
clarify responsibilities, PPP project evaluation was assigned to a new Sub-secretary under the
Public Investment Secretary (facilitating the integration of PPPs in the general public investment
management), while the evaluation of costing and fiscal risk management was transferred to the
Ministry of Finance. At the same time, the support to sectoral ministries on PPP-structuring was
concentrated at Banco de Inversión y Comercio Exterior (BICE), a publicly-owned development
bank. Going forward, we are committed to continue strengthening the fiscal-risk management
function at the Ministry of Finance, including by establishing a unique structure responsible for
assessing the fiscal costs and risks potentially arising from all infrastructure projects—including
PPPs, concessions, and power-purchase agreements (PPA). In addition, we intend to enhance our
PPP fiscal-risk assessment by collaborating with the Fund and the World Bank and adopting their
PFRAM model.
Debt Management
9. We continue to expand the issue of peso-denominated government securities from a low

base to develop domestic debt markets. Our newly unveiled market makers program will help
increase the liquidity of the local markets. We have also introduced a securities lending facility to
support market makers. In the coming months, we intend to continue strengthening our
medium-term debt management procedures to provide clear guidance to investors and offer a
predictable approach to our budget financing operations.
10. Given heightened levels of market volatility in April, we focused on maximizing rollover
volumes to safeguard the financial program and rebuild market confidence. Nonetheless, we

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remain committed to continue extending the maturities of government debt and building
liquidity buffers, as market conditions permit. We will also continue to take advantage of market
conditions to proactively smooth the liquidity impact of bulky amortizations, as we have done
with the June maturity of the dual currency bond, which we successfully rolled-over the full
amount.
11. The Fund’s budget support will be used solely to meet primary balance needs and the
interest and amortization payments on the debt of the Treasury. We commit not to undertake FX
sales through state-owned banks. FX sales of the Fund disbursements into the market will only
be undertaken if a peso funding need arises and in agreement with IMF staff. Any such sales will
be a cash management operation and take place through pre-announced daily auctions.
12. On April 15, the BCRA commenced the conversion of IMF budget support from FX into
pesos, on behalf of the Treasury, through transparent and predictable pre-announced daily FX
auctions into the market.
• The daily amounts have been and will remain constant at US$60 million per day.
• Auctions will take place daily until end-November at the same time of the day, unless
interrupted (announced with at least 20 calendar days in advance). This will imply a total of
US$9.6 billion sold.
• To ensure traceability of these funds, we commit to maintaining the peso proceeds from
these auctions at the BCRA until their use.
Monetary Policy
13. Higher than expected inflation so far in 2019 suggests that reducing inflation and
inflation expectations will be a gradual process. The best contribution we can give to this process
is continuing with our cautious monetary policy stance. We have therefore committed to
maintain the level of monetary base constant since February 2019 until end-July at
AR$ 1343 billion and lower it gradually to reach a level of AR$ 1298 billion in October.
14. In July, we have lowered our unremunerated reserve requirements in order to

accommodate the seasonal demand for currency in circulation. However, mindful of the need to
maintain a sufficiently high interest rate, we have introduced a floor on nominal rates for July of
58 percent and we will reverse the impact of the lower reserve requirements during August to
October as the seasonality reverses.
15. In line with the announced monetary policy framework, we remain committed to a
floating exchange rate, where the level of the peso will be determined by market forces, with
intervention by the central bank limited to avoid excessive day-to-day volatility that could
challenge the orderly functioning of the foreign exchange market with an adverse influence on
inflation.

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16. In April, and in response to higher than expected inflation in Q1, we have announced that
we will maintain the limits of the reference zone unchanged until end-year and have committed
not to purchase FX at least until end-July 2019. These steps are expected to provide the needed
tightening in the monetary stance to bring inflation and inflation expectations down.
17. We submitted a draft of a new BCRA charter to Congress in March, which will strengthen
the monetary policy framework and central bank governance. The charter will enshrine the
autonomy of the central bank, establish price stability as the first and fundamental mandate of
the BCRA, restrict monetary financing of the public deficit, enhance decision-making structures,
and buttress transparency and accountability. We continue to work towards achieving an
adequate level of capital for the BCRA by end-December 2019.
Social Safety Net
18. We remain committed to protecting the most vulnerable from the risks they face in the
current economic conditions. The front-loading in March of all the increases in AUH benefits
implied by the indexation formula for 2019 provided an important shelter to beneficiaries from
erosion in purchasing power. The expansion of the social spending adjustor at the third review
has also played an important role in ensuring adequate provision of medicines in public health
centers; continued food support; and active labor market programs. To further support job
market entrants during a difficult economic environment, we propose that the programs
including unemployment insurance, scholarship programs for students from low-income families
and researchers, formulation and implementation of public policy programs to support gender
equity, and comprehensive support programs for mothers, children, and teens be added to the
social spending adjustor and the social protection floor under the program.
19. To better support working families and foster female labor force participation, we
propose that the program Primera Infancia (childcare centers for low-income and vulnerable
women) also be added to the social spending adjustor and the social protection floor under the
program. Access to high quality childcare is essential to help women achieve their full potential
in the labor market. With IDB support, we will continue to improve the quality and availability of
our system of childcare centers for low-income mothers, including by expanding their hours to
better fit working parents’ schedules. To level the playing field, we also remain committed to
achieving the passage of legislation to increase the duration of paternity leave. Work is ongoing
for the roll-out of a time-use survey across Argentina by 2020, to better understand women’s
care duties and support higher female labor force participation.
Growth Enhancing Structural Reforms
20. As the macroeconomic environment stabilizes, we will begin refocusing on structural

reforms to generate the growth and job creation that are needed to raise the standards of living
of all Argentines. Our recently unveiled measures to support Small and Medium Enterprises
(SMEs), including more favorable payment plans for tax debt, regulatory improvements for
banking services, and the elimination of export taxes for some small exporters will play a key role

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in supporting businesses in a tight monetary environment while having a relatively low fiscal
impact.
21. The recent landmark agreement on a trade deal between MERCOSUR and the EU will
bring together almost a quarter of the world’s GDP and more than US$110 billion in trade of
goods and services. Once finalized and ratified (expected in the next two years), the agreement
will phase-in the elimination of tariffs on 93 percent of Mercosur exports to the EU and give
preferential treatment to the remainder 7 percent. The EU will eliminate tariffs on 82 percent of
agricultural imports from Mercosur and give preferential treatment and quotas on most of the
remaining products.
22. We will continue our efforts to lower barriers to trade and foreign investment We
continue to simplify and reduce import and export administrative costs through our single
window (VUCE) program. We are also working to improve domestic competition and ease of
doing business, including by simplifying entry regulations and reducing the administrative
burden on firms. We will also continue to reduce the administrative burden of paying taxes and
aim to reduce the current time needed significantly in the next five years.
Tackling Corruption
23. An executive order launched and approved the 2019-2023 National Anti-Corruption Plan
in April 2019. The next phase will include the implementation of the core pillars as described in
the Plan. The text of the Executive Order mandates the creation of an advisory Committee
(Consejo Asesor), to be composed from civil society, private sector, and other well-known experts
in the field, to monitor the implementation of the Plan. The Committee is expected to be
established later this year.
24. In April 2019, the Minister of Justice approved and cleared the process for conducting the
implementation of the e-declaration system for assets and interests by high ranking officials
within the Executive branch, on a trial basis. The implementation exercise will be under the
responsibility of the Ministerio de Modernización and monitored by the Office of Anti-Corruption.
Full implementation of this e-declaration system will further enhance transparency and support
the existing AML/CFT regime and ongoing criminal investigations.
25. The implementation of the company registry (Registro Nacional de Sociedades, Concursos
y Quiebras) is currently taking place. With assistance provided by the Tax Revenue Authority
(Administración Federal de Ingresos Públicos – AFIP) information is available on-line for all
companies established and incorporated in Argentina. In this respect, we will continue the
process for verifying that information contained in this registry is accurate and updated.
26. In March 2019, we submitted to Congress the amendments to the Ethics in Public Service
Law which establishes the framework for granting the Office of Anti-corruption the necessary
authority, powers, roles, responsibilities, and sanctions to more effectively fight corruption and

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further engage in anti-corruption activities with other competent authorities. We continue to

monitor progress with respect to the discussion and/or approval of this law by end-August 2019.
27. We continue to enhance the AML Law and anticipate that by end-September 2019, we
will submit to Congress the amendments to this law, which includes provisional measures with
appropriate safeguards for the freezing of funds and other assets by the Financial Intelligence
Unit when there are suspicions of money laundering or terrorism financing in the context of an
investigation when such funds or assets are linked to corruption or other crimes.

62
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Table 1. Argentina: Schedule of Reviews and Purchases

Amounts
Available on or after SDR millions % Quota Conditions 1/
June 20, 2018 10,613.71 333% Approval of Arrangement

October 26, 2018 4,100.00 129% First Review and end-September 2018 performance criteria
December 15, 2018 5,500.00 173% Second Review and end-October 2018 performance criteria
March 15, 2019 7,800.00 245% Third Review and end-December 2018 performance criteria
June 15, 2019 3,900.00 122% Fourth Review and end-March 2019 performance criteria
September 15, 2019 3,900.00 122% Fifth Review and end-June 2019 performance criteria
December 15, 2019 700.04 22% Sixth Review and end-September 2019 performance criteria
March 15, 2020 700.04 22% Seventh Review and end-December 2019 performance criteria
June 15, 2020 700.04 22% Eighth Review and end-March 2020 performance criteria
September 15, 2020 700.04 22% Ninth Review and end-June 2020 performance criteria
December 15, 2020 700.04 22% Tenth Review and end-September 2020 performance criteria
March 15, 2021 700.04 22% Eleventh Review and end-December 2020 performance criteria
June 1, 2021 700.05 22% Twelfth Review and end-March 2021 performance criteria
Total 40,714 1277%
1/ Apart from periodic performance criteria, conditions also include continuous performance criteria.
Table 2. Argentina: Quantitative Performance Criteria and Indicative Targets 1/2/
(In billions of Argentine pesos unless otherwise stated)
2019
Proposed
Revised PC
Fiscal targets
1. Primary balance of the federal government (floor) 3/ 9/ 6.0 6.0 10.5 n.a. n.a. n.a. n.a. 20.0 n.a. n.a. n.a. 60.0 70.0 n.a. n.a. 0.0
3. Federal government accumulation of domestic arrears (ceiling) 5/ 30.0 5.6 n.a. n.a. n.a. n.a. 45.0 n.a. n.a. n.a. 53.2 53.2 n.a. n.a. 58.5
4. Social assistance spending (floor) 3/ 60.0 72.7 n.a. n.a. n.a. n.a. 132.0 n.a. n.a. n.a. 205.0 223.5 n.a. n.a. 325.0
Indicative targets
Monetary targets
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63
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Table 3. Argentina: Structural Program Conditionality

Implementation
Structural Benchmarks Timing
status
Publish a regulation to introduce a foreign exchange auction for BCRA intervention in the spot and forward
1 Jun-2018 Met
markets.
Not met.
Establish a senior-level debt management coordinating committee between Treasury-Finance-BCRA that
2 Sep-2018 Implemented with
would meet weekly and coordinate activities linked to sterilization and debt issuance plans.
one day delay.
Present a three-year budget document to Congress, with transparent medium-term objectives for the Not met.
3 primary balance, that are consistent with the parameters of the program. The budget would include details Oct-2018 Implemented with
on realistic and prudent macroeconomic assumptions underlying the medium-term budget. delay.
4 Congress will pass the 2019 Budget targeting a zero primary balance. Nov-2018 Met
Not met.
Congress will pass the revenue legislation underpinning the 2019 fiscal plan, including the increase in rate
5 Nov-2018 Implemented with
and base of the wealth tax (Impuesto sobre los Bienes Personales)
delay.
Publish a debt management strategy with the goal of on increasing the predictability, pricing, and liquidity
6 Dec-2018 Met
of treasury issuances
Provide sufficient resources to the newly created CBO (Oficina de Presupuesto del Congreso), so that it can
effectively evaluate macroeconomic and budgetary forecasts (including those contained in the annual
7 Dec-2018 Met
budget and MTFF), provide independent costing to Congress of new policy initiatives, assess the
government’s fiscal plans (including the annual budget), and monitoring public finances at the central level.
8 Limit the BCRA’s counterparties for sale of LEBACs, open market operations and repos to domestic banks. Mar-2019 Met
Submit to Congress a new charter for the central bank that will ensure operational autonomy, strengthen the
9 BCRA’s monetary policy mandate, enhance decision-making structures, and buttress transparency and Mar-2019 Met
accountability
Design a compliance improvement plan and risk mitigation strategies around taxpayer segments, taxpayer
10 Jun-2019 Met
obligations, and core taxes.
Finalize a time-bound plan for transferring the Treasury Single Account (TSA) from Banco Nacion to the BCRA in
11 June 2020. The plan will include all operational details of the new TSA at the BCRA, the timeline for the transfer Sep-2019
process, and a deleveraging plan for Banco Nacion.
Recapitalize the central bank to ensure it has the adequate level of capital as percent of the monetary base
12 Dec-2019
plus the outstanding stock of LEBACs.
Implement an integrated auditing action plan for the Simplified Taxpayer Regime (Monotributo), covering 20
13 Dec-2019
percent of taxpayers under this regime.

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Attachment II. Technical Memorandum of Understanding

1. This Technical Memorandum of Understanding (TMU) sets out the understandings
regarding the definitions of the performance criteria (PCs), indicative targets (ITs), and
consultation clauses, that will be applied under the Stand-by Arrangement, as specified in the
Memorandum of Economic and Financial Policies (MEFP, Update) and its attached tables. It also
describes the methods to be used in assessing the program’s performance and the information
requirements to ensure adequate monitoring of the targets.
2. For program purposes, all foreign currency-related assets, liabilities and flows will be
evaluated at “program exchange rates” as defined below, with the exception of items affecting
government fiscal balances, which will be measured at current exchange rates. The program
exchange rates are those that prevailed on September 28, 2018. Accordingly, the exchange rates
for the purposes of the program are shown in Table 1.
Table 1. Argentina: Program Exchange Rates

Argentine Pesos to the US dollar 1/ 41.25
Argentine Pesos to the SDR 1/ 57.55
Argentine Pesos to the Euro 1/ 47.90
Argentine Pesos to the Canadian dollar 1/ 31.91
Argentine Pesos to the British pound 1/ 53.79
Argentine Pesos to the Renminbi 1/ 6.01
Gold prices (US$/ounce) 2/ 1,190.88
1/ Rate published by the BCRA as of September 28, 2018.
2/ Spot price published by Bloomberg as of September 28, 2018.
3. Any variable that is mentioned herein for the purpose of monitoring a PC or IT and that is
not explicitly defined, is defined in accordance with the Fund's standard statistical methodology,
such as the Government Finance Statistics. For any variable or definition that is omitted from the
TMU but is relevant for program targets, the authorities of Argentina shall consult with the staff
on the appropriate treatment to reach an understanding based on the Fund's standard statistical
methodology.
4. Inflation expectations will be monitored for the purpose of the program based on the
information reported in the survey of professional forecasters organized each month by the
BCRA, which is called the Relevamiento de Expectativas de Mercado (REM). Unless otherwise
indicated, the inflation expectation in program document will refer to the median of the forecasts
included in the REM.

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QUANTITATIVE PERFORMANCE CRITERIA: DEFINITION OF VARIABLES
5. Definitions: The Federal government (Sector Público Nacional No Financiero) for the
purposes of the program consists of the central administration, the social security institutions,
the decentralized institutions (Administración Nacional), and PAMI, fiduciary funds, and other
entities and enterprises of the federal government.
Cumulative Floor of the Federal Government Primary Balance
6. Definitions: The primary balance of the Federal government is defined in accordance

with the monthly and annual reporting of the “Esquema IMIG”. This is equivalent to total
revenues (ingresos totales, according to “Esquema IMIG”) minus primary spending (gastos
primarios). Revenues are recorded on a cash basis and include tax revenues (ingresos tributarios),
revenue income (rentas de la propiedad), other current revenues (otros ingresos corrientes), capital
revenues (ingresos de capital), and imputed revenues associated with the 2008 nationalization of
private pension assets. Revenues exclude financial transfers from the Central Bank (Adelantos
Transitorios), interest income from intra-public sector holding of securities and debt obligations
and proceeds from the sale of other financial assets. Profit transfers from the central bank would,
however, be regarded as revenues for program purposes.
7. Federal government primary expenditure is recorded on a cash basis and includes

spending on social protection (prestaciones sociales), economic subsidies (subsidios económicos),
operational expenses (gastos de funcionamiento), current transfers to provinces (transferencias
corrientes a provincias), other current spending (otros gastos corrientes), and capital spending
(gastos de capital), which includes capital transfers to provinces.
8. The accounting of the revenues from pension assets held by the Fondo de Garantía y
Sustentabilidad (FGS) as a result of the 2008 pension fund nationalization poses a complex
methodological issue. While the budget reported an immediate increase in pension spending
after 2008, it never reported the revenues (contributions) capitalized in the nationalized pension
assets available in 2008. The authorities and staff agreed on an IMF technical assistance mission
by June-2019, that will collect the necessary information and advise the authorities on the correct
record keeping of the nationalization operation and of subsequent changes to the pension
system that is consistent with sound statistical principles as embedded in the IMF’s Government
Finance Statistics. Should the mission’s recommendations lead to any changes in the
measurement of the budget balance, additional policy measures would be discussed in order to
achieve the fiscal targets agreed under the IMF-supported program. For the time being, the
value of pension fund assets seized in 2008 will be spread over time as revenue to partially offset
future pension spending. In particular, the amount will be divided by the average life expectancy
of contributors to those schemes at 2018, that is 20 years. The limit on the amount to be
recognized as revenue shall be 80,000 million pesos in 2019 (equivalent to 0.4 percent of 2019
GDP) and 0.4 percent of GDP per year afterwards.

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9. Government-funded, public-private partnerships will be treated as traditional public

procurements. Federal government obligations associated with public private partnerships would
be recorded transparently in budget data and measured as part of the Federal government
deficit as they occur (on a cash basis).
10. Costs associated with divestment operations or liquidation of public entities, such as
cancellation of existing contracts or severance payments to workers, will be allocated to current
and capital expenditures accordingly.
11. All primary expenditures (including fines) that are directly settled with bonds or any other
form of non-cash liabilities will be recorded as spending above-the-line and will therefore
contribute to a decrease in the primary balance. This excludes the settlement of pension liabilities
(in either cash or through non-cash liabilities) towards people enrolled in the federal pension
system (the Sistema Integrado de Pensiones y Jubilaciones) incurred in the past and related to
existing and pending court rulings; payments to provinces of Mendoza, San Luis and Santa Fe
related to Supreme court cases that became definite before June 19, 2018, but for which the
amount to be paid and the terms of such payments were not determined; payments of arrears as
per ICSID or similar arbitration rulings and; starting in 2019, the repayment of liabilities incurred
under Plan Gas, as determined by the Resolution 97/2018 of the former Ministry of Energy and
Mining. For the purposes of the program, the economic transaction that gave rise to these latter
liabilities will be recognized above the line in 2017.
12. The Federal government’s primary balance will be measured at each test date as the
cumulative value starting from the beginning of each calendar year.
13. Monitoring: All fiscal data referred to above and needed for program monitoring
purposes will be provided to the Fund with a lag of no more than 25 calendar days after the end
of each month.
14. Adjustor to the primary balance for social spending: The floor on the primary balance
of the federal government (cumulative since the beginning of the year) will be adjusted
downward by an amount equivalent to the amount that expenditures, measured on a cash basis,
exceed the programmed values defined in Table 2, in the following programs:
• Asignación Universal para Protección Social, under the jurisdiction of the Social Security
Administration (ANSES, program 19, subprogram 03).
• Proyectos Productivos Comunitarios, under the jurisdiction of the Ministry of Health and
Social Development, Secretary of Social Development (Program 50).
• Políticas Alimentarias, under the jurisdiction of the Ministry of Health and Social
Development, Secretary of Social Development (Program 26).

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• Prevención y Control de Enfermedades Inmunoprevenibles, under the jurisdiction of the

Ministry of Health and Social Development, Secretary of Health (Program 20).
• Cobertura Universal de Salud, Medicamentos, under the jurisdiction of the Ministry of Health
and Social Development, Secretary of Health (Program 29).
• Hogares con Garrafas, under the jurisdiction of the Ministry of the Treasury, secretary of
Energy (Program 73, Subprogram 02, activity 40).
• Apoyo al Empleo, under the jurisdiction of the Ministry of Health and Social Development,
Secretary for Social Development (Program 38).
• Formulación e implementación de políticas públicas de la mujer under the jurisdiction of the

National Women’s Institute (Program 17)
• Promoción y asistencia a espacios de primera infancia, Acciones para la Promoción y

Protección Integral de los Derechos de Niños, Niñas y Adolescentes, Atención de la Madre y el
Niño, Desarrollo de la Salud Sexual y la Procreación Responsable, under the jurisdiction of the
Ministry of Health and Social Development (Programs 47, 44, 17, and 25, respectively).
• Formación de recursos humanos under the jurisdiction of the National Council for Scientific
and Technical Innovations (Program 16)
• Gestión y Asignación de Becas a Estudiantes (Act. 40- PROGRESAR) under the Minsitry of
Education, Culture, Science and Technology (program 49, activity 40)
• Seguro de desempleo under the jurisdiction of ANSES (program 18)
The value of the adjustor will be capped at 63,900 million pesos in 2019. The value of the
adjustor will be capped at the equivalent of 0.3 percent of GDP in each successive calendar year.
Table 2. Argentina: Social Spending Subject to Adverse Economic

Conditions
(program baseline)
AR$ millions 1/
end-March 2019 33,201
end-June 2019 68,568
end-September 2019 133,988
end-December 2019 198,586
1/ Cumulative from January 1 of each year.
15. Adjustor for external financing projects: The floor on the primary balance of the
federal government (cumulative since the beginning of the year) will be adjusted up (down) by
the shortfall (excess) in the expenditure, measured on a cash basis, financed by disbursements of

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external project loans by International Financial Institutions and bilateral partners, compared to
the capital expenditures settled in the budget (Table 3). The value of the adjustor would be
capped at cumulative 42,500 million pesos in 2019, and 0.2 percent of GDP in each successive
calendar year. Starting in 2019 the benchmark will be the expenditure financed by disbursements
of external project loans by IFIs and bilateral partners, as stated in the budget.
Table 3. Argentina: Multilateral/Bilateral Funded Capital Spending

(program baseline)
AR$ millions 1/
end-March 2019 10,000
end-June 2019 14,700
1/ Cumulative from January 1 of each year.
Floor on Federal Government Spending on Social Assistance Programs
16. Definition: Social spending for the purpose of the program is computed as the sum of
all federal government spending (both recurrent and capital) on a cash basis on the following
social protection programs: 1
• Asignaciones Familiares Activos, under the jurisdiction of the Social Security Admnistration
(ANSES) which includes the Asignación Prenatal, por Adopción, por Hijo, por Hijo
Discapacitado, por Maternidad, por Matrimonio, por Nacimiento, and the Ayuda Escolar Anual.
• Asignaciones Familiares Pasivos, under the jurisdiction of the Social Security Admnistration
(ANSES) which includes the Asignación Prenatal, por Cónyuge, por Hijo, por Hijo
Discapacitado, and the Ayuda Escolar Anual.
• Asignaciones Familiares Sector Público Nacional, under the jurisdiction of the Social Security
Admnistration (ANSES) which includes the Asignación Prenatal, por Hijo, por Hijo
Discapacitado, por Maternidad, and the Ayuda Escolar Anual.
• Asignación Universal para Protección Social, under the jurisdiction of the Social Security
Admnistration (ANSES) which includes the following sub-programs: Asignación Universal por
Hijo, Asignación por Embarazo, and Ayuda Escolar Anual.
• Proyectos Productivos Comunitarios, under the jurisdiction of the Ministry of Health and
1
The floor on social spending in end-June 2018 was met, using an accrual basis. The TMU has been updated to
clarify that going forward, this is to be measured on a cash basis.

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• Políticas Alimentarias, under the jurisdiction of the Ministry of Health and Social
• Prevención y Control de Enfermedades Inmunoprevenibles, under the jurisdiction of the

• Cobertura Universal de Salud, Medicamentos, under the jurisdiction of the Ministry of Health
• Hogares con Garrafas, under the jurisdiction of the Ministry of the Treasury, secretary of
Energy (Program 73, Subprogram 02, activity 40).
• Apoyo al Empleo, under the jurisdiction of the Ministry of Health and Social Development,
• Formulación e implementación de políticas públicas de la mujer under the jurisdiction of the

• Promoción y asistencia a espacios de primera infancia, Acciones para la Promoción y

• Formación de recursos humanos under the jurisdiction of the National Council for Scientific
• Gestión y Asignación de Becas a Estudiantes (Act. 40- PROGRESAR) under the Minsitry of
• Seguro de desempleo under the jurisdiction of ANSES (program 18)
17. Monitoring: Data will be provided to the Fund with a lag of no more than 25 calendar
days after the end of each month.
Ceiling on Federal Government Accumulation of Domestic Arrears
18. Definition: Domestic arrears are defined as the floating debt, that is the difference
between primary spending recorded on an accrual basis (gasto devengado, from the SIDIF
system) and primary spending recorded on a cash basis (base caja, from the Treasury). This
excludes intra-public transfers (transferencias figurativas) and includes primary spending for
personnel (gasto en personal), acquisition of goods and services (bienes y servicios), non-
professional services (servicios no profesionales), capital expenditures (bienes de uso), and
transfers (transferencias).

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19. Measurement: Arrears are measured daily. The program will cap the average of arrears
during the three months prior and up to a test date at 0.5 percent of GDP, according to the path
set in Table 2.
20. Monitoring: Data recorded at daily frequency will be provided to the Fund with a lag of
no more than 25 calendar days after the end of each month.
Federal Government Non-Accumulation of External Debt Payments Arrears
21. Definition of debt: External debt is determined according to the residency criterion
(and, as such, would encompass nonresident holdings of Argentine law peso and foreign
currency debt). The term “debt” 2 will be understood to mean a current, i.e., not contingent,
5
liability, created under a contractual arrangement through the provision of value in the form of
assets (including currency) or services and which requires the obligor to make one or more
payments in the form of assets (including currency) or services, at some future point(s) in time;
these payments will discharge the principal and/or interest liabilities incurred under the contract.
Debts can take several forms; the primary ones being as follows:
i. Loans, i.e., advances of money to the obligor by the lender made on the basis of an
undertaking that the obligor will repay the funds in the future (including deposits, bonds,
debentures, commercial loans and buyers’ credits) and temporary exchanges of assets that
are equivalent to fully collateralized loans under which the obligor is required to repay the
funds and usually pay interest, by repurchasing the collateral from the buyer in the future
(such as repurchase agreements and official swap arrangements);
ii. Suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer payments
until sometime after the date on which the goods are delivered or services are provided; and
iii. Leases, i.e., arrangements under which property is provided which the lessee has the right
to use for one or more specified period(s) of time that are usually shorter than the total
expected service life of the property, while the lessor retains the title to the property. For the
purpose of the program, the debt is the present value (at the inception of the lease) of all
lease payments expected to be made during the period of the agreement excluding those
payments that cover the operation, repair or maintenance of the property.
22. Definition of external arrears: External debt payment arrears for program monitoring
purposes are defined as external debt obligations (principal and interest) falling due after May
30, 2018 that have not been paid, considering the grace periods specified in contractual
agreements. Under the definition of debt set out above, arrears, penalties and judicially awarded
damages arising from the failure to make payment under a contractual obligation that
2
As defined in Guidelines on Public Debt Conditionality in Fund Arrangements, Decision No. 15688-(14/107).

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constitutes debt are debt. Failure to make payment on an obligation that is not considered debt
under this definition (e.g., payment on delivery) will not give rise to debt.
23. Coverage: This performance criterion covers the federal government. This performance
criterion does not cover (i) arrears on trade credits, (ii) arrears on debt subject to renegotiation or
restructuring; and (iii) arrears resulting from the nonpayment of commercial claims that are the
subject of any litigation initiated prior to May 30, 2018.
24. Monitoring: This PC will be monitored on a continuous basis.
Floor on the Change in Non-Borrowed Net International Reserves
25. Definitions: Non-borrowed Net international reserves (NIR) of the BCRA are equal to the
balance of payments concept of NIR defined as the U.S. dollar value of gross official reserves of
the BCRA minus gross official liabilities as defined below. Non-U.S. dollar denominated foreign
assets and liabilities will be converted into U.S. dollar at the program exchange rates.
26. Definition: The foreign exchange auction is a mechanism through which the BCRA sells
US dollars to banks in exchange for Argentine pesos. All banks in Argentina can participate in the
auction. Bids are allotted solely based on the rate proposed by the counterparties, starting from
highest peso per US dollar rate until the pre-announced amount is exhausted. The auction
weighted average rate, marginal rate, total bid amount, and the final allotment are published
within one hour after the auction allotment.
27. Gross official reserves are defined consistently with the Sixth Edition of the Balance of
Payments Manual and International Investment Position Manual (BPM6) as readily available
claims on nonresidents denominated in foreign convertible currencies. They include the
(i) monetary claims, (ii) free gold, (iii) holdings of SDRs, (iv) the reserve position in the IMF, and
(v) holdings of fixed income instruments. Excluded from reserve assets are any assets that are
pledged, collateralized or otherwise encumbered, claims on residents, claims in foreign exchange
arising from derivatives in foreign currency vis-à-vis domestic currency (such as futures, forwards,
swaps and options), precious metals other than gold, assets in nonconvertible currencies and
illiquid assets.
28. Gross official liabilities in foreign currencies include (i) all borrowed reserves, including
foreign currency swaps, loans, and repo operations with all counterparties (domestic and
foreign), regardless of maturity, ii) other foreign currency liabilities including deposits of financial
institutions, (ii) the use of Fund resources for Balance of Payments support extended in the
context of the exceptional financing package, (iii) any deliverable forward foreign exchange
(FX) liabilities on a net basis—defined as the long position minus the short position payable in
foreign currencies directly undertaken by the BCRA or by any other financial institutions on
behalf of the BCRA. The Federal government’s FX deposits at the BCRA are not considered gross
foreign liabilities of the BCRA.

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29. The change in non-borrowed net international reserves, starting with the end-October
2018 targets, will be measured as the change in the stock of non-borrowed NIR at each test date
relative to the stock on September 28, 2018, which stood at US$15.680 billion.
30. Monitoring: Foreign exchange asset and liability data will be provided to the Fund at
daily frequency within one day.
31. Adjustors:
• Adjustor for Multilateral loans. The NIR targets will be adjusted upward (downward) by the
surplus (shortfall) in disbursements from the IMF and other multilateral institutions (the IBRD,
IDB and CDB) and grants, relative to the baseline projection reported in Table 4. Budget
support disbursements are defined as external loan disbursements (excluding project
financing disbursements) from official creditors that are usable for the financing of the
general government.
Table 4. Argentina: External Program Disbursements

(Baseline Projection, all new disbursements are assumed to take
place on the 15th of each month)
Cumulative flows from end-September 2018 (In millions of US$)
Budget support disbursements from IMF
end-July 2019 29,884
end-August 2019 29,884
end-October 2019 35,356
end-November 2019 35,356
Budget support loans from other multilateral sources
end-July 2019 2,950
• Adjustor for FX sales. The NIR targets will be adjusted downward by the total amount of
U.S. dollars sold via foreign exchange auctions, which are executed in accordance with the
intervention rule described below. This amount excludes the daily US$ 60mn sold by the
BCRA on behalf of Treasury.
o Definition of Intervention. Foreign exchange interventions are defined as official

foreign currency sales and purchases. Only the BCRA will be allowed to implement
foreign exchange intervention. State-owned banks will not be allowed to engage in
official FX sales on behalf of the government.

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o Exchange Rate: The AR$/US$ exchange rate for the purpose of the intervention rule is
the rate of the Mercado Abierto Electrónico (MAE). The MAE publishes continuous
updates of the AR$/US$ exchange rate throughout the trading day and a daily fixing (see
BCRA Communication A3500).
o Intervention rule:
Interventions are defined as below, consistent with BCRA communique of April 29th,
2019. 3 The sale of foreign currency would aim at countering disorderly market
conditions, preventing such movements from unduly affecting the exchange rate and
contributing to the correct functioning of FX market.
• If the exchange rate is below the upper limit of the reference zone (below $51.5)
the BCRA would be prepared to sell dollars.
• If the exchange rate is above the upper limit of the reference zone (exceeds
AR$51.5 per US$): the BCRA would be able to sell up to US$250 million. The
BCRA may undertake additional interventions above this US$250 million limit to
counteract episodes of excessive exchange rate volatility.
o All foreign exchange sales and purchases are expected to be unsterilized.
o Monitoring. Daily data on the amount and rate of the transactions between the BCRA
and each of its counterparties will be provided to the Fund at the end of each day.
• Adjustor for the FX debt issuance. The NIR targets will be adjusted upward by the surplus
in total amount of proceeds from gross issuances of FX-denominated debt, relative to the
baseline projection reported in Table 5.
o Monitoring. Data on debt issuances and rollovers, by currency and counterparty, will be
provided to the Fund after each issuance, with a lag of no more than two days.
3
http://www.bcra.gob.ar/Noticias/Comunicado-290419.asp

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Table 5. Argentina: Proceeds from FX Debt Issuances

(Baseline Projection)
Cumulative flows from end-September 2018 (In millions of US$)
end-January 2019 5,805
end-February 2019 6,770
end-March 2019 8,063
end-April 2019 11,054
end-May 2019 12,983
end-June 2019 13,795
end-July 2019 14,997
 Adjustor for Treasury FX sales. The NIR targets will be adjusted downward by the total
amount of dollars sold by the Treasury to the market to meet the peso obligations of the
government. FX sales will be implemented by the BCRA on behalf of Treasury starting on
April 15, via an auction organized each business day at the same time of the day. Daily
amounts will be constant at US$60 million per day and auctions will continue until
end-November. This adjustor will be capped at US$9.6 billion for 2019.
Ceiling on the Change in the BCRA’s Stock of Non-Deliverable Forwards (NDF)
32. Definitions. The stock of non-deliverable forwards (NDF) will be defined as the net of the
U.S. dollar notional value of all long and short position contracts entered by the BCRA involving
the Argentinian peso, either directly or through any institution they use as their financial agent.
33. Monitoring. This PC will be monitored on a quarterly basis, with monthly indicative
targets. Data will be provided to the Fund at the end of each day.
34. Quarterly Performance Criterion: The change in the stock of NDFs will be measured as
the change in the stock of NDF at each test date relative to the stock on September 28, 2018,
which stood at US$3.6 billion.
Continuous Stop to BCRA’s Financing of the Government
35. Definitions. Central bank (BCRA) financing to the government includes overdraft
transfers from the BCRA to the Federal Government (line Adelantos Transitorios in the summary
account of the BCRA, as published on its web site), distribution of unrealized profits, and the

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acquisition of government debt on the primary market or by purchase from public institutions.
The BCRA will extend zero net financing to the government for the duration of the program.
36. Monitoring. Daily data will be provided to the Fund within two days. This target will be
monitored on a continuous basis.
Ceiling on the Change in the Monetary Base
37. Definition. Monetary Base (MB) is defined as the sum of currency in circulation, itself a
sum of cash held by public, cash in bank vaults and settlement checks, and the current account
balances of the banks at the BCRA. MB is measured in peso. The definition is consistent with the
measure of MB published daily on the BCRA website in its Daily Monetary Report and monitored
as part of the BCRA’s monetary program.
38. The ceiling applies to the monthly average of MB. The change will be calculated with
respect to the average of the month of February 2019 which was AR$1,343 billion. The ceilings
shall be consistent with MB targets adopted by the BCRA in line with their monetary framework
and communicated publicly on the BCRA website in the biweekly Report on Monetary Base
Target, plus (less) any adjustments as outlined below.
39. Monitoring. Data will be provided to the Fund on a daily basis with a lag of no more
than 2 days.
40. Adjustors:
 Adjustor for FX sales. The base money target will decrease by the peso equivalent of FX
sales, which are executed in accordance with the intervention rule described below
o Intervention rule:
Interventions are defined as below, consistent with BCRA communique of April 29th,
2019.4 The sale of foreign currency would aim at countering disorderly market
conditions, preventing such movements from unduly affecting the exchange rate and
contributing to the correct functioning of FX market.
 If the exchange rate is below the upper limit of the reference zone (below $51.5)
the BCRA would be prepared to sell dollars.
 If the exchange rate is above the upper limit of the reference zone (exceeds
AR$51.5 per US$): the BCRA would be able to sell up to US$250 million, the
BCRA may undertake additional interventions above this US$250 million limit to
counteract episodes of excessive exchange rate volatility.
4
http://www.bcra.gob.ar/Noticias/Comunicado-290419.asp

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 The target will be reduced at the pro rata of the remaining days in the month for the month
during which the intervention happened and by the full amount for the following month. For
instance, assuming a month of 30 days, the base money target will be reduced by AR$ 50 if
the BCRA sells the equivalent of AR$ 100 on the 15th for the current month and by AR$ 100
for the following months.
 Adjustor for FX purchases. In line with the monetary framework, FX purchases (from the
market or the treasury) when the peso is below the reference zone will be unsterilized. The
MB target will be adjusted upward by the FX purchases, relative to the original targets, at the
pro rata of the remaining days in the month for the month during which the purchase
happened and by the full amount for the following month. For instance, assuming a month
of 30 days, the base money target will be increased by AR$50 if the BCRA buys the
equivalent of AR$ 100 on the 15th for the current month and by AR$ 100 for the following
months.
41. Change in the reserve requirements. The BCRA will reach agreement with IMF staff
prior to making any changes to the levels or structure of reserve requirements.
Ceiling on Central Bank Credit to the Government
42. Definitions. Central bank (BCRA) credit to the government is defined as the sum of the
stock of government securities held by the BCRA (line Títulos Públicos in the summary account of
the BCRA, as published on its web site) and overdraft transfers from the BCRA to the Federal
Government (line Adelantos Transitorios in the summary account of the BCRA, as published on its
web site). Any decrease in the claim shall reflect cash payments of this amount in pesos by the
Treasury to the BCRA; variation in the value of the claim due to changes in exchange rates or
accounting practices are excluded.
43. Monitoring. Daily data will be provided to the Fund within two days.
44. The change in the stock of net credit to government will be measured relative to the
stock on September 28, 2018, which stood at AR$ 2,592.86 billion.
QUANTITATIVE INDICATIVE TARGETS: DEFINITION OF VARIABLES
Cumulative Floor on Primary Balance of the General Government
45. Definition: The general government is defined as the federal government (as defined
above) plus the aggregate position of the provincial governments (defined for purposes of this
TMU as the 23 provinces plus the Autonomous City of Buenos Aires).
46. Definition: The primary balance of the general government will include the primary
balance of the federal government (as defined above, including adjustors) plus revenues of the

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provincial governments (including transfers from the federal government) less cash expenditures
of the provincial governments. Total expenditures of the provincial government will include
wages, goods and services, transfers and subsidies, capital spending and transfers to
municipalities from the provincial government. Expenditures of municipalities and municipal
revenues are excluded. The result of the provincial governments will be measured from above-
the-line, with expenditure defined according to the information provided by the Secretaría de
Hacienda.
47. Adjustor to the primary balance for social spending: The floor on the primary balance
of the general government (cumulative since the beginning of the year) will be adjusted
downward by an amount equivalent to the amount that expenditures, measured on a cash basis,
exceed the programmed values defined in Table 2 in the following programs:
 Asignación Universal para Protección Social, under the jurisdiction of the Social Security
Administration (ANSES, program 19, subprogram 03).
 Proyectos Productivos Comunitarios, under the jurisdiction of the Ministry of Health and
 Políticas Alimentarias, under the jurisdiction of the Ministry of Health and Social
 Prevención y Control de Enfermedades Inmunoprevenibles, under the jurisdiction of the

 Cobertura Universal de Salud, Medicamentos, under the jurisdiction of the Ministry of Health
 Hogares con Garrafas, under the jurisdiction of the Ministry of the Treasury, secretary of
Energy (Program 73, Subprogram 02, activity 40)
 Apoyo al Empleo, under the jurisdiction of the Ministry of Health and Social Development,
 Formulación e implementación de políticas públicas de la mujer under the jurisdiction of the

 Promoción y asistencia a espacios de primera infancia, Acciones para la Promoción y

 Formación de recursos humanos under the jurisdiction of the National Council for Scientific

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 Gestión y Asignación de Becas a Estudiantes (Act. 40- PROGRESAR) under the Ministry of
 Seguro de desempleo under the jurisdiction of ANSES (program 18)
The value of the adjustor for will be capped at 63,900 million pesos. The value of the adjustor will
be capped at the equivalent of 0.3 percent of GDP in each successive calendar year.
48. Adjustor for external financing projects: The floor on the primary balance of the
general government (cumulative since the beginning of the year) will be adjusted up (down) by
the shortfall (excess) in the expenditure, measured on a cash basis, financed by disbursements of
external project loans by International Financial Institutions and bilateral partners, compared to
the capital expenditures settled in the budget (Table 3). The value of the adjustor would be
capped at cumulative 42,500 million pesos in 2019, and 0.2 percent of GDP in each successive
calendar year. Starting in 2019 the benchmark will be the expenditure financed by disbursements
of external project loans by IFIs and bilateral partners, as stated in the budget.
49. Reporting: Data, as available to the Consejo Federal de Responsabilidad Fiscal, will be
provided to the Fund with a lag of no more than 60 calendar days after the end of each quarter.
Estimates will be provided for the provinces of La Pampa and San Luis.
PERFORMANCE CRITERION ON THE INTRODUCTION OR

MODIFICATION OF MULTIPLE CURRENCY PRACTICES
50. The performance criterion on the introduction or modification of multiple currency

practices (MCP) excludes multiple currency practices arising from any modification to the
multiple-price foreign exchange auction system introduced in June 2018.
OTHER INFORMATION REQUIREMENTS
51. In addition to the data needed to monitor program conditionality, the authorities will
also provide the following data so as to ensure adequate monitoring of economic variables:
A. Daily
 Nominal exchange rates; interest rates on domestic debt instruments including LETES
(at different maturities), LEBAC (at different maturities), LELIQs, and BOTES; total currency
issued by the BCRA; deposits held by financial institutions at the BCRA; required reserves of
the banking sector in local and foreign currency; total liquidity assistance to banks through
normal BCRA operations, including overdrafts; interest rates on overnight deposits and on
7-day repurchase and reverse repurchase agreements.
 Individual banks’ gross foreign exchange positions by currencies.

ARGENTINA
 Individual banks’ foreign currency accounts with the BCRA.
 Individual banks’ reserve positions at the BCRA.
 The BCRA’s outstanding stock of non-deliverable forwards (long and short positions).
B. Weekly
 BCRA balance sheet.
 Daily balances of all bank accounts of the national treasury.
 Analysis on the use of IMF budget support in accordance with the Memorandum of
Understanding between the Treasury and the BCRA.
 FX operations of Banco Nación on a weekly basis.
C. Monthly
 Federal government operations including monthly cash flow from the beginning to the end
of the current fiscal year (and backward revisions as necessary), with a lag of no more than
25 days after the closing of each month, according to both the format of the Informe
Mensual de Ingresos y Gastos (IMIG) and to the format of the Cuenta Ahorro Inversion
Financiamiento (AIF). On Federal and Provincial Debt:
o The expected monthly federal government and provincial government debt amortization
and repayments (local currency and FX bonds, treasury bills, Eurobonds, domestic loans,
external commercial and external official loans). This would include both direct and
guaranteed debt. In the case of issuance of government guaranteed debt, include the
name of the guaranteed individual/institution.
o Federal government and provincial government debt stock by currency, as at end

month, including by (i) creditor (official, commercial domestic, commercial external;
(ii) instrument (local currency and FX denominated bonds, treasury bills, Eurobonds,
domestic loans, external commercial and external official loans); and (iii) direct and
guaranteed.
 The balances of the (federal) government at the central bank and in the commercial banking
system needed to determine the cash position of the (federal) government.
 Deposits in the banking system: current accounts, savings and time deposits within six weeks
after month end. Average monthly interest rates on loans and deposits within two weeks of
month end; weighted average deposit and loan rates within six weeks after month end.

ARGENTINA
 Balance sheets of other financial corporations (non-deposit taking), including holdings of

federal and provincial debt and of the BCRA instruments within one month after month end.
 Reserve position of public and private banks, on a bank by bank basis.
 Data on the total loans value of all new federal government-funded public private
partnerships.

ARGENTINA
FOURTH REVIEW UNDER THE STAND-BY ARRANGEMENT
July 12, 2019 AND REQUEST FOR MODIFICATION OF PERFORMANCE
CRITERIA, AND FINANCING ASSURANCES REVIEW—
SUPPLEMENTARY INFORMATION
Approved By Prepared by the Argentina team.

Nigel Chalk (WHD) and
Martin Mühleisen (SPR)
1. This statement provides additional information that has become available

since the Staff Report (EBS/19/69) was circulated to the Executive Board on
July 3, 2019. The information does not alter the thrust of the staff appraisal.
2. All end-June fiscal performance criteria were met. The primary balance
closed at AR$30.2 billion, AR$10 billion over the unadjusted target for June
(AR$20 billion) and AR$47.5 billion above the target adjusted for the additional social
and capital spending (AR$-17.3 billion). This mainly reflects an AR$40 billion
overperformance in non-tax revenues, due to an earlier-than-expected sale of a power
plant. Overall, tax revenues for the first half of the year came in in line with staff
projections, with the recovery in Q2 largely making up for shortfalls in Q1. Expenditures
continue to contract vis-à-vis 2018, particularly wages and pensions (4.9 percent of
GDP during 2019H1 versus 5.4 percent of GDP in same period of 2018). Social spending
overperformed the floor by AR$25.6 billion, closing end-June at AR$157.6 billion.
Domestic arrears were also below their ceiling by AR$32 billion. Given that the PCs on
primary balance, social spending
and domestic arears have been
met, waivers of applicability for
these targets are no longer
needed.
3. Inflation expectations
were relatively stable in June.
The June Survey of Market
Expectation (REM) from the
BCRA showed slightly lower
average monthly inflation
expectations in June and July (2.6
ARGENTINA
and 2.4 percent, respectively, versus 2.7 and 2.5 percent in the May survey), with little
changes for August to November. On average markets now expect inflation to be 40.2
percent (y/y) at end-December 2019. Markets expect the LELIQ rate to reach the same
level in December as in the previous survey (about 55 percent).
4. Market conditions continued to be favorable in the first week of July. As

of July 8, the peso has appreciated by 1.4 percent since end-June. LELIQ rates declined
by 279 bps since end-June and stood at 59.9 percent on Wednesday July 8th which
(together with the new REM inflation expectations) correspond to a real annualized
ex-ante interest rate of 38 percent. Sovereign spreads fell to 805 on July 8, with
CDS spreads remaining relatively stable since end June.

Table 1. Argentina: Quantitative Performance Criteria and Indicative Targets 1/ 2/
(in billions of Argentine pesos, unless otherwise stated)
g p
2019
Proposed
Revised PC
Fiscal targets
1. Primary balance of the federal government (floor) 3/ 9/ 6.0 6.0 10.5 n.a. n.a. n.a. n.a. 20.0 -17.3 30.2 Met n.a. n.a. 60.0 70.0 n.a. n.a. 0.0
3. Federal government accumulation of domestic arrears (ceiling) 5/ 30.0 5.6 n.a. n.a. n.a. n.a. 45.0 13.0 Met n.a. n.a. 53.2 53.2 n.a. n.a. 58.5
4. Social assistance spending (floor) 3/ 60.0 72.7 n.a. n.a. n.a. n.a. 132.0 157.6 Met n.a. n.a. 205.0 223.5 n.a. n.a. 325.0
Indicative targets
Monetary targets
ARGENTINA
3
Supplement to the Letter of Intent
Acting Managing Director

Washington, D.C. 20431
United States of America
July 11, 2019
Dear Acting Managing Director,
This is to inform you that we now have fiscal data as of end-June, showing that we have met the
end-June PCs for the primary balance and the social spending. Therefore, we are no longer
requesting waivers of applicability for these PCs.
Your sincerely,
/s/ /s/
Nicolas Dujovne Guido Sandleris
Minister of Finance President, Central Bank of Argentina

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IMF Country Report No.

• A Staff Supplement updating information on recent developments.

The documents listed below have been or will be separately released.

International Monetary Fund

© 2019 International Monetary Fund

IMF Executive Board Completes Fourth Review Under Argentina’s Stand-By

“The Argentine government has consistently demonstrated its commitment to fiscal

“Steadfast implementation of the policies underlying the IMF-supported program will be

2 INTERNATIONAL MONETARY FUND

RECENT DEVELOPMENTS _______________________________________________________________________ 5

OUTLOOK AND RISKS _________________________________________________________________________ 11

PROGRAM IMPLEMENTATION _______________________________________________________________ 12

MAINTAINING FISCAL DISCIPLINE ___________________________________________________________ 12

MONETARY AND EXCHANGE RATE POLICIES ________________________________________________ 15

BOOSTING GROWTH __________________________________________________________________________ 16

TACKLING CORRUPTION ______________________________________________________________________ 18

PROGRAM ISSUES _____________________________________________________________________________ 18

EXCEPTIONAL ACCESS CRITERIA _____________________________________________________________ 20

STAFF APPRAISAL _____________________________________________________________________________ 22

INTERNATIONAL MONETARY FUND 3

4 INTERNATIONAL MONETARY FUND

3. Inflation has fallen but remains high.

INTERNATIONAL MONETARY FUND 5

6 INTERNATIONAL MONETARY FUND

Source: Bloomberg. Sources: BCRA and IMF staff calculations.

INTERNATIONAL MONETARY FUND 7

8 INTERNATIONAL MONETARY FUND

INTERNATIONAL MONETARY FUND 9

Cumulative Primary Balance Q1

surplus up to May. The primary federal balance from 6%

January-May totaled 0.2 percent of GDP, compared to -0.3

percent of GDP during the same period in 2018. Tax 2% 0.1%

revenues have been partly boosted by higher-than- 0% 0.0%

projected inflation and export tax receipts recovered -2% -0.1%

somewhat in May. Primary expenditures fell by 0.7 percent -4% -0.2%

categories (except for energy subsidies).

14. On average, domestic rollovers in Q2 have Total Debt Issuances

Since the third review, rollover rates for privately-held 300%

AR$ denominated dual-currency bond (DUO) maturing in 0%

issuance for new FX-linked bonds (amortizing in August,

than in the same period in 2018. The current

10 INTERNATIONAL MONETARY FUND

OUTLOOK AND RISKS

INTERNATIONAL MONETARY FUND 11

MAINTAINING FISCAL DISCIPLINE

12 INTERNATIONAL MONETARY FUND

INTERNATIONAL MONETARY FUND 13

II Review III Review IV Review

Total revenue 25.3 28.1 26.4 25.5

Primary spending 27.9 28.1 26.4 25.9

Primary Balance -2.6 0.0 0.0 -0.3

14 INTERNATIONAL MONETARY FUND

MONETARY AND EXCHANGE RATE POLICIES

INTERNATIONAL MONETARY FUND 15

16 INTERNATIONAL MONETARY FUND

32. The energy sector holds untapped

previous year and now constitute 17 percent and 0.0

40 percent of total production, respectively. -1.0

Renewables share in electricity production has -2.0