IMF staff approves Argentina funds, wants more spending cuts

(Adds IMF quotes, context)

BUENOS AIRES, March 18 (Reuters) - The International Monetary Fund has reached a staff-level agreement with Argentina over its third review of the country's economic progress under a financing deal agreed last year, the IMF said on Monday, which would unlock around $10.87 billion.

The disbursement, part of a $56.3 billion standby financing deal to help Argentina recover from an economic crisis that has rocked the South American nation over the last year, is subject to approval by the IMF executive board.

The agreement, which had been expected, paves the way for Argentina to received the latest injection of IMF funds as the government battles to tame rampant inflation, protect the local peso currency and endeavor to revive growth.

The IMF's executive board rubber-stamped the previous tranche of funds in December, worth around $7.6 billion, after a staff-level agreement was reached in November. The board's next review is expected in the coming weeks, the IMF said.

The fund added it welcomed recent moves by Argentina to tighten monetary policy, though it said the country needed to rein in spending further to tame debt levels.

"Achieving a zero primary deficit in 2019 will require further restraint in government spending," IMF mission chief for Argentina Roberto Cardarelli said in a statement. An IMF team visited the country as part of the review last month.

Cardarelli added that taming high inflation would be a "lengthy process" and acknowledged that a weak economy and high inflation were "taking a toll" on the country.

"Economic activity has been weak but there are good prospects for a gradual recovery," he said.

The IMF remains unpopular with many in Argentina, who blame the fund for austerity measures that exacerbated a previous financial crisis at the beginning of the century. (Reporting by Hugh Bronstein; Writing by Adam Jourdan; Editing by Richard Chang and Phil Berlowitz)

First Published: 2019-03-18 21:07:22
Updated 2019-03-18 21:30:16

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