(Adds comments from analyst in paragraphs 7-8, details on
adjustments)
By Jorgelina do Rosario and Rodrigo Campos
LONDON/NEW YORK, March 13 (Reuters) - The International
Monetary Fund (IMF) and Argentina reached a staff-level
agreement on the fourth review of their $44 billion loan
program, the IMF said in a statement on Monday, confirming that
some economic targets for the country could be eased.
The IMF staff said that adjustments were being requested to
key targets to build up foreign currency reserves, which has
been hampered by a major drought gripping the grains producing
nation that has hurt exports of soy, corn and wheat.
It said adjustments would be focused on early 2023 and would
help adapt the program for the "impact of the increasingly
severe drought", while also taking into account plans by the
country to save dollars by cutting spending on energy imports.
Argentina, the world's biggest exporter of soymeal and
soyoil and the No. 3 for corn, is facing the worst drought in at
least six decades, combined with repeated heat waves.
The IMF said that the country would need to strengthen its
policy package in the face of the drought to ensure stability,
rein in annual inflation running near 100% and address what it
called "recent policy setbacks".
Reuters previously reported that Argentina was looking to
lower the bar on the reserves targets agreed with the IMF,
including by linking the targets to its exports.
"The IMF is acknowledging that the macroeconomic backdrop
has become more challenging, especially considering the severe
drought," said Gordian Kemen, a New York-based head of EM
sovereign strategy at Standard Chartered.
Even so, he said, it was unclear how Argentina would be able
to "re-accelerate reserve accumulation later", especially with
pressure to spend ahead of elections slated for October.
SCARCE RESERVES
Argentina's net reserves stood at around $4.2 billion at the
end of February, according to calculations from Buenos
Aires-based firm FMyA.
The review is now pending board approval, after which some
$5.3 billion would be made available to Argentina.
The current loan arrangement was worth $44 billion when it
was agreed in early 2022 to replace a failed $57 billion program
from 2018. Most of the cash would be used to pay the fund back.
Argentina surprisingly announced in January a debt buyback
despite depleted hard currency reserves - a move that Moody's
considered a default, while S&P and Fitch did not.
A top IMF official later said the fund would "prefer not to
have actions that undermine the reserve accumulation that we're
assuming in the program."
(Reporting by Rodrigo Campos in New York and Jorgelina do
Rosario in London; Editing by Alison Williams and Stephen
Coates)
