The Executive Board of the International Monetary Fund (IMF) met today to discuss the Ex-Post Evaluation (EPE) of Argentina's exceptional access under the 2022 extended arrangement under the Extended Fund Facility (2022 EFF), which expired at the end of 2024.
As required in all cases of exceptional access (EA) to Fund financing, this EPE assesses whether the macroeconomic strategy, program design, and financing under the 30-month EFF arrangement approved by the Executive Board in March 2022 ( Press release No. 22/89 ) were appropriate and in line with Fund policies. The report also includes an appendix with the authorities' reactions and views on the 2022 EFF.
The 2022 EFF came about in extremely difficult circumstances. Argentina was unable to regain external viability under the 2018 Stand-By Arrangement and faced large and concentrated repurchase obligations to the Fund totaling about US$ 35 billion in 2022-23. In addition, the country was grappling with high inflation, a significant budget deficit, low international reserves, and elevated public debt. The inability to meet obligations falling due to the Fund could have led to severe and protracted consequences for Argentina, significant reputational implications to the Fund, and financial costs for the Fund and its members.
The EPE report concludes that, reflecting this difficult context, as well as the challenging post-COVID conjuncture and the need to secure ownership by a reluctant government, the design of the 2022 EFF did not provide for an adjustment commensurate with the scale of Argentina's fiscal and balance of payments (BoP) problems. The combination of a gradualist reform strategy in a country with severely limited access to financial markets, large adverse shocks, and progressively weaker policy implementation resulted in outcomes in 2022-23 that fell well short of what was envisaged at the time of program approval.
A major course correction subsequently undertaken by the Milei government—notably a sharp fiscal consolidation, an upfront devaluation, and an end to monetary financing of the budget helped Argentina avert a full-blown crisis and make important strides toward macroeconomic stabilization.
Overall, the 2022 EFF did not achieve its original macroeconomic objectives, but it was successful in easing the burden of Argentina's financial obligations to the Fund by rescheduling repayments over 2026-34, and may have helped Argentina avoid even worse outcomes in 2022-23.
The EPE report concludes that the experience with the 2022 EFF affirms many lessons from previous Argentina EPEs and warrants further reflection in several areas, including the suitability of the Fund's lending policy framework to deal with high and concentrated exposure cases as well as when resolution of a deeply entrenched BoP problem may not be feasible through a single Fund arrangement; the need for clearer commitments on specific contingency plans when implementation risks are high; and the role that assessments of countries' capacity to repay should play in guiding the design of program safeguards, among others.
Executive Board Assessment [1]
Executive Directors welcomed the comprehensive ex post evaluation (EPE) of Argentina's exceptional access (EA) to Fund financing under the 2022 Extended Arrangement under the Extended Fund Facility (2022 EFF).
Directors regretted that the 2022 EFF did not achieve its objectives. While recognizing that the program reflected difficult trade-offs in a highly complex setting—and that the rescheduling of Argentina's repayment obligations to the Fund likely helped avoid potentially worse outcomes—they agreed that program design did not provide for an adjustment commensurate to the scale of the problem and risks of the situation. Furthermore, the combination of a gradualist reform strategy, large adverse shocks, and progressively weaker implementation resulted in outcomes substantially worse than in the baseline by end‑2023. Directors however welcomed the course correction and significant shift in ownership and toward macroeconomic stabilization achieved since December 2023.
With respect to the consistency of the 2022 EFF with Fund policies and procedures, Directors expressed concern that the approval of the program request and subsequent reviews relied on the technicality of assessments of individual elements (capacity-to-repay descriptors, the exceptional access criteria, and strength of program design) as having been satisfied rather than a holistic view of how the Fund's resources were safeguarded. Directors also acknowledged that while policies regarding enterprise risk management (ERM) were evolving during the period, these risks could have been assessed and managed earlier, allowing for broader and deeper Board discussions on mitigation options.
Directors underscored the continued relevance of the lessons drawn by previous EPEs, including the importance of ensuring robustness of the program to shocks, balancing ownership with the quality and appropriateness of program policies, and a sharper and more holistic application of the EA framework—where they also highlighted the findings of the December 2024 IEO evaluation. Directors broadly agreed that the experience of the 2022 EFF demonstrates that the Fund's current lending policy framework may not be perfectly suited to deal with cases of large and concentrated Fund exposures, although a number of Directors expressed reservations about some alternative policy options, such as postponement of obligations to the Fund. Directors also supported the need for early and comprehensive enterprise risk discussions with the Board in such cases. While they generally agreed with the need to explore alternative approaches in circumstances where resolution of a deeply entrenched balance of payments problem may not be feasible through a single arrangement, a few Directors expressed reservations.
Directors supported further reflection in several other areas, including: the role that the capacity-to-repay assessments should play in the Fund's lending decisions; the provision of technical assistance to facilitate debt restructuring outside of a Fund-supported program; the practice of repeatedly approving program reviews on the basis of "temporary" FX control measures; the importance of clearer commitments to specific contingency plans when program implementation risks are high; and how the Fund and its shareholders deal with political pressure. A number of Directors also emphasized the importance of effective external communications.
Directors urged that the findings from this and previous EPEs inform the ongoing discussions on a potential follow-up program with Argentina.
[1] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .
