On June 20th, the International Monetary Fund’s (IMF) Executive Board approved the US$50,000 million stand-by arrangement for Argentina. The intention of the Executive branch is to use these funds to strengthen the role of the Central Bank and the national economy in the face of the dollar fluctuation. Hours later, Morgan Stanley Capital Investment (MSCI) reclassified Argentina as an “emerging market”.

The approval of the agreement will allow the Argentine authorities to immediately access 15,000 million dollars, of which half will be used to reinforce the national budget. Minister of Finance Nicolás Dujovne anticipated that the Central Bank will bid daily 100 million dollars from budget support funds to meet expenses in pesos. The remaining 35,000 million will be tied to the results of the quarterly reviews that the IMF Executive Board will carry out, throughout the agreement’s duration.

The toughest opposition to Government (Kirchnerismo and left parties) questioned that the Executive has made this agreement without the endorsement of Congress. In that context, they tried to hold a session Tuesday June 19th, to repudiate the negotiations with the IMF and to prevent Government to take this loan. However, the opposition failed to gather a quorum and the session failed.

On the other hand, on June 20th, the MSCI reclassified Argentina as an “emerging market” in the annual review of market classification. Thus, the country exceeds the “frontier market” status that it had since 2009. The entity informed that this decision was a consequence of the wide acceptance of the market participants involved in the consultation, in particular of the international institutional investors. However, they warned that if market access restrictions were introduced, the classification could be reviewed.