IMF welcomes Argentine Central Banks large reserve purchases

At the first press conference of the year, International Monetary Fund (IMF) spokesperson Julie Kozack confirmed that the Fund’s technical mission will carry out the second review of the agreement it reached with Argentina last year. She also highlighted that the Central Bank has been accumulating reserves “at a faster than anticipated pace” since the beginning of the year. “We are also very encouraged by the authorities ongoing action to rebuild reserves. These actions are supported by recent adjustments to the monetary and FX [foreign exchange] frameworks, including the introduction of a pre-announced FX reserve purchase program,” Kozack said. She said Argentina had “begun the year on a robust footing,” while also underscoring progress on the macroeconomic front.  “We see continued progress in stabilization efforts and that is helping to boost market sentiment in Argentina,” she said, adding that after the contraction in 2024, growth of 4.5% is expected in 2025. At the same time, she emphasized that inflation fell from triple-digit levels in 2024 to “around 30%” by the end of 2025, the lowest in eight years. (Official data released the day before the conference showed that 2025 full-year inflation came to 31.5%.) She avoided referring — despite being asked — to the acceleration of the consumer price index in recent months, with a December reading of 2.8%. On reserve accumulation, Kozack said: “While it is still early in the process. Reserve accumulation has started the year at a faster than anticipated pace. The central bank reserve purchases have exceeded the 5% of daily FX volume floor on most days.” The monetary authority has bought US$515 million over eight trading sessions and reserves increased by US$3.6 billion so far this year, although US$3 billion came from a repo agreement with international private banks. However, debt payments totaling US$4.3 billion were also made on Global and Bonares bonds, and commitments of about US$100 million were paid to international organizations. Kozack also praised the approval of the 2026 Budget, “the first in two years,” noting that it includes “zero overall fiscal balance anchor for Argentina.” This adds to the “efforts to secure support for legislation, aimed at reducing labor market informality, and increasing labor market flexibility,” she added. IMF technical review due in February The second technical review of the agreement between the IMF and Argentina, a US$20 billion deal known as an Extended Fund Facility that was inked last April, will take place in February. Both the targets and the possibility of granting waivers will be discussed. The technical agenda is still being prepared, and details will be communicated once they are finalized, she added. Under the agreement between Argentina and the IMF, the reserve accumulation target was not met. The government will have to request a waiver for this, which the organization is likely to grant, given the praise it has expressed for the country’s economic policies. However, in the last review, carried out in July, the IMF had already relaxed its reserve accumulation target for Argentina’s Central Bank. The target shifted from negative US$2.6 billion, and by year-end the economy minister confirmed that a “re-estimation” of about US$5 billion less had been carried out. The fiscal target, meanwhile, was for the primary surplus to reach 1.3% of GDP. This Friday, the December fiscal result will be released and the final figure will be known, although there is no doubt that this target will be met. Originally published on Ámbito