IMF reaches staff-level agreement for $2 billion disbursement to Argentina

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(Refiles to correct day of week to Thursday in last paragraph)

(Reuters) -The International Monetary Fund said on Thursday it has reached a staff-level agreement on the first review of its extended fund facility with Argentina, potentially unlocking about $2 billion for the economically embattled Latin American nation.

The executive board meeting for the review, part of Argentina’s $20 billion loan program with the lender, is expected to take place later this month, the IMF said in a statement. 

The IMF said the program had started off strongly “despite a more challenging external backdrop,” with Argentina’s inflation and poverty coming down while growth has ticked up.

“Notably, Argentina has re-accessed international capital markets earlier than anticipated,” the IMF added.

The lender said agreements had been reached with Argentina on safeguarding its fiscal anchor, building up reserves and making the drop in inflation last. 

In the wake of the $20 billion, 48-month deal Argentina reached with the IMF in April, the country has loosened years-long controls that restricted access to foreign currency and has let the peso fluctuate within a moving band.

Analysts say the country’s economic growth is expected to moderate in the coming months due to the uncertainty around Argentina’s upcoming midterm elections.

The agreement with the IMF came with metrics to unlock funds, including on inflation and building up depleted central bank foreign currency reserves, something Argentina has struggled with.

“With the fund we have no problem,” said Economy Minister Luis Caputo in remarks to the press earlier on Thursday. “Of course, we’re working to reconstruct the level of reserves.”

(Reporting by Rishabh Jaiswal and Kylie Madry; Editing by Nia Williams and Stephen Coates)