The program will extend repayment until 2035 and include a four-and-a-half-year grace period.
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The Government revealed key details of the agreement it is finalizing with the International Monetary Fund (IMF), which will have the structure of an Extended Fund Facility (EFF) maturing in 2035. The new scheme includes a deferral of scheduled payments for the next four years and a grace period of four and a half years before resuming the repayment of funds.
The decree that formalizes the agreement was published this Tuesday in the Official Gazette and will be sent to Congress for consideration in the bicameral commission. Among the reasons, the Government highlights the need to lift exchange restrictions and strengthen reserves to improve Argentina's insertion in the international market.
Fresh dollars and postponement of payments
The decree doesn't specify the total amount of the agreement, but anticipates that there will be both rollover of maturities and additional disbursements. According to estimates by UBS bank, the program could reach USD 20 billion, of which USD 12 billion would be to refinance existing debt and USD 8 billion would be new funds.
El Gobierno confirmó los lineamientos del nuevo acuerdo con el FMI
A portion of the additional financing will be allocated to the repurchase of Non-Transferable Letters held by the Central Bank. However, the decree clarifies that it will not be enough to redeem the total USD 23 billion held by the BCRA, which implies that the cancellation will be partial.
Additionally, Article 1 of the decree establishes that the Non-Transferable Letters will be canceled in chronological order, starting with the maturity on June 1, 2024, which amounts to approximately USD 10 billion.
Four years of financial relief and new exposure with the IMF
One of the key points of the agreement is that Argentina will not have to make payments to the IMF until October 2029. This grace period will allow for a reduction in the burden of maturities and provide predictability to the markets.
El Gobierno confirmó los lineamientos del nuevo acuerdo con el FMI
Meanwhile, the new scheme will extend the repayment term until 2035, which implies a rescheduling of the maturities originally agreed upon in the 2022 agreement. According to estimates by EcoGo, the financial relief for the next four years would be almost USD 20.6 billion if interest is included.
The decree also suggests that the new IMF dollars can't be used to intervene in the foreign exchange market, but only to cancel Treasury debts with the Central Bank and the IMF itself.
With this scheme, the Government seeks to ease the pressure on reserves, clear the financial horizon, and strengthen macroeconomic stability. The economic policy memorandum with the IMF will finalize the details of the use of disbursements and compliance conditions.
