The $2B World Bank package includes a $1B loan and a $1B IBRD guarantee, letting Argentina issue a AAA-enhanced bond to cut borrowing costs and rebuild reserves.
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The World Bank Group approved a $2 billion commercial loan package for Argentina on Tuesday, aimed at lowering the country's financing costs and improving public debt management, the institution said in a statement.
The package includes a $1 billion Development Policy Loan with a 14.5-year maturity and a 5-year grace period, plus a $1 billion guarantee from the International Bank for Reconstruction and Development (IBRD). The guarantee is designed to help Argentina access international capital markets at better terms than it could on its own.
Argentina's government has been working to refinance its peso-denominated debt and rebuild foreign-currency reserves after years of inflation above 200% and a series of economic crises. The World Bank loan gives the treasury a lower-cost source of dollars compared to issuing new sovereign bonds, which have traded at distressed levels.
The IBRD guarantee backs a new bond issuance that Argentina plans to sell in international markets. By wrapping the guarantee around the bond, the country can offer investors a AAA-rated credit enhancement, reducing the yield it must pay. The structure mirrors similar World Bank-supported deals for other emerging-market borrowers, including a 2023 package for Ecuador.
Economy Minister Luis Caputo said the loan "strengthens our reserves and reduces the fiscal burden of debt service" in a statement released after the approval. The government has been running a primary fiscal surplus since early 2024, a condition the World Bank cited as supporting the loan's approval.
The Development Policy Loan portion will be disbursed directly to the treasury and counted as part of Argentina's foreign-exchange reserves, which the central bank has been rebuilding through a mix of export dollar inflows and multilateral lending. Net reserves remain negative when swap lines with China are excluded, according to local economists.
Argentina's dollar bonds due 2030 traded near 45 cents on the dollar Tuesday, up slightly on the news. The country's risk spread, measured by the JPMorgan EMBI Global Diversified index, narrowed 12 basis points to 1,340.
The World Bank said the loan supports "structural reforms to improve the efficiency of public spending and strengthen the transparency of fiscal accounts." Argentina's Congress is currently debating a fiscal reform package that includes changes to the income tax and a reduction in energy subsidies.
Argentina has received roughly $40 billion from the International Monetary Fund under a current program, with the next review scheduled for June. The World Bank loan does not change the IMF program's conditions but provides additional financing outside the fund's stricter fiscal targets.
The IBRD guarantee structure allows Argentina to issue a bond with a maturity longer than what the market would offer without the enhancement. The country has not issued a benchmark international bond since 2020, when it restructured about $65 billion of foreign-law debt.
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