IMF urges Argentina to build up "critically low" international reserves

BUENOS AIRES, July 22 (Xinhua) -- The International Monetary Fund (IMF) on Tuesday warned that Argentina's international reserves remain at "critical" levels, urging the country to take additional steps to strengthen them.

"The economic fundamentals have improved substantially since the end of 2023, but net international reserves remain critically low," said the IMF's latest External Sector Report, titled Global Imbalances in a Changing World.

Argentina's external assessment "is subject to exceptionally high uncertainty and depends on the implementation of structural reforms that boost competitiveness and productivity," the IMF added.

The agency's analysis coincides with discussions the organization is holding with Argentine authorities regarding the first technical review of a 20 billion U.S. dollars Extended Fund Facility financial assistance program implemented in April.

The IMF said Argentina could tackle its current situation with various policy decisions, including the sustained implementation of a program anchored in fiscal matters, a more robust monetary and exchange rate regime, with measures to rebuild international reserves, and reforms that foster competitiveness.

"It is necessary to maintain a solid trade balance, attract foreign direct investment, regain market access, and safeguard external sustainability", the IMF noted.

Specifically, the IMF advocated for "a more flexible exchange rate, along with a gradual easing of remaining foreign exchange restrictions," as well as "reforms to create a more open and market-oriented economy."

The agency considered these moves key "to building resilience and supporting sustainable long-term capital inflows to boost Argentina's vast external potential, including in the energy and mining sectors." ■