UPDATE 1-IMF assessing Argentina debt swap against program objectives

(Adds details from news conference, context)

March 23 (Reuters) - The International Monetary Fund is assessing Argentina’s debt swap announcement in accordance with the objectives of their $44 billion program, a spokesperson for the global lender said on Thursday.

Argentina’s dollar bond prices fell on Wednesday, a day after the government announced measures to push state entities to give up their local and foreign-law sovereign bonds in dollars to tamp down on exchange rate volatility.

“Prudent debt management is necessary to improve the functioning of the domestic bond market and the FX market,” IMF spokesperson Julie Kozack said in a news conference.

“But it must be conducted in a manner that does not add to vulnerabilities down the road,” she added, without specifying if the plan creates those vulnerabilities.

Kozack said Argentina’s economic management during the second half of 2022 supported stability and helped secure the program targets, but “against a more challenging economic backdrop, particularly the increasingly severe drought, stronger policy actions are now necessary to safeguard stability.”

Argentina, a top global grains exporter, is suffering through its harshest drought in decades and the smaller crops are expected to keep pressure on dwindling central bank foreign exchange reserves.

“Stronger actions are also needed to address rising inflation and policy setbacks,” Kozack said.

The IMF and Argentina reached a staff-level agreement last week that when approved by the IMF’s board will allow the disbursement of $5.3 billion to the government - money it needs to pay the IMF back

next week


Kozack said the board review is expected to happen “relatively soon and in line with the regular quarterly cycle of reviews.” (Reporting by Rodrigo Campos, Andrea Shalal and David Lawder; Editing by Paul Simao)