Argentina: Fifth and Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility, Request for Rephasing of Access, Waivers of Nonobservance of Performance Criteria, Modification of Performance Criteria and Financing Assurances Review

Since completion of the fourth review, Argentina’s economic situation has become increasingly fragile with episodes of heightened market volatility, reflecting more recently political uncertainties. While the historic drought has resulted in larger than expected losses to agricultural production, exports, and fiscal revenues, non-agricultural activity has been resilient, reflecting robust domestic demand, in part a result of policy slippages. Inflation and external pressures have intensified, with reserves falling to dangerously low levels on account of the drought and insufficient policy adjustment. Policy slippages reflected in part political constraints and electoral considerations. During the August 13 open primary elections (PASO), the libertarian party (Libertad Avanza) received the highest share of votes (30.0 percent), followed by the opposition coalition (Juntos por el Cambio, 28.3 percent) and the governing coalition (Unidos por la Patria, 27.3 percent). The general elections are scheduled to take place on October 22, with a run-off on November 19, if needed. A new administration will assume office in early December.