Argentina: First Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for a Waiver of Nonobservance of a Performance Criterion, Rephasing of Access, Modification of Performance Criteria, and Financing Assurances Review-Pres

The new Fund-supported program has had a strong start. Appropriately tight fiscal and monetary policies have underpinned the smooth transition toward a more flexible exchange rate regime and the easing of most foreign exchange (FX) restrictions. Inflation and inflation expectations are firmly on a downward trajectory, the exchange rate has fluctuated around the midpoint of a widening band, and the gaps between the official and parallel exchange rates have largely been eliminated. Economic activity remains generally resilient, supporting a further reduction in poverty. Notably, Argentina has re-entered international capital markets well ahead of the timeline anticipated at the program’s approval. That said, reserve buffers are taking longer to rebuild, amid a widening of the current account deficit, given strong domestic demand and a sharp easing of import restrictions.