Press Release No. 03/91

Press Release: IMF Completes Second Review of Argentina's Stand-By Arrangement, Approves US$320 Million Disbursement

June 20, 2003

The Executive Board of the International Monetary Fund (IMF) today completed the second review of Argentina's performance under a seven-month, SDR 2.17 billion (about US$3.1 billion) Stand-By Arrangement, which was approved on January 24, 2003 (see Press Release No. 03/09). The completion of this review enables the release of an additional SDR 226.2 million (about US$320 million).

The Executive Board also approved Argentina's request for waivers of the non-observance of certain performance criterion, and of the applicability of fiscal quantitative performance criterion for end-May 2003.

Following the Executive Board discussion, Horst Köhler, Managing Director and Chairman, said:

"Favorable macroeconomic developments and the easing of political uncertainties linked to the presidential elections have been key to strengthening market sentiment in Argentina in recent months. The economy is recovering and inflation has decelerated sharply, allowing domestic interest rates to fall, while the peso has strengthened. A large trade surplus has allowed an increase in international reserves. These signs of recovery are encouraging. But persistence in implementing structural reforms will be necessary to sustain the growth momentum. Therefore, in light of the progress that has been made so far, the Fund has approved completion of the second review under the Stand-By arrangement.

"The Fund looks forward to working closely with the authorities in developing a strong and confidence-building medium-term successor program that would sustain growth and reduce poverty. The forthcoming visit of the Managing Director will provide a good opportunity to exchange views with President Kirchner and his economic team on how to achieve these objectives," Mr. Köhler stated.