The World Bank in Argentina

With a Gross Domestic Product (GDP) of approximately US$610 billion, Argentina is one of the largest economies in Latin America.

Argentina has vast natural resources in energy and agriculture. Within its 2.8 million square kilometers of territory, it is endowed with extraordinary fertile lands, gas, and lithium reserves, and has great potential for renewable energy. Argentina is a leading food producer with large-scale agricultural and livestock industries.  In addition, it has significant opportunities in some manufacturing subsectors, and innovative services in high tech industries.

After the pandemic, economic activity has recovered faster than expected, with an increase of 10.4% of GDP in 2021 and 5.2% in 2022, after a fall of 9.9% in 2020 in the context of the crisis unleashed by COVID-19. However, economic activity has contracted in the last 4 months of 2022, affected by strict import controls to sustain the accumulation of reserves, while a historic drought limits growth in 2023. Inflation remains high, and as of February 2023, it exceeded a 100% per year. The economy continues to show macroeconomic imbalances that limit the sustainability of economic growth.

After the transfer of private debt in 2020, an agreement was reached with the International Monetary Fund in early 2022 for a new Extended Fund Facility (EFF). With a duration of 30 months and a four-and-a-half-year grace period, this program allows the country to postpone its maturities with the agency and strengthen its reserves in the short term. Among the commitments is the gradual fiscal consolidation - reaching equilibrium in 2025 - together with the reduction of monetary financing of the deficit. In its first year, fiscal deficit was reduced in comparison to 2021, reaching the agreed goals mainly because of the effect of inflation on public spending and the application of a tariff segmentation scheme.

Last Updated: Apr 03, 2023

The World Bank is a long-term strategic partner of Argentina. The Country Partnership Framework (CPF) for 2019-2022 seeks to contribute to reducing poverty through promoting sustainable and inclusive growth. A review of the CPF was carried out in 2022, which led to a redesign of some of the objectives due to the outbreak of the Covid-19 pandemic.

The main areas of work are:

1. Supporting inclusive recovery

The focus of this area is recovering from the current crisis and setting the foundations for inclusive growth, as well as creating the conditions for private job creation and investment. This area also supports improving effectiveness of public policies and investments, enhancing urban mobility to provide safe and inclusive access to jobs, improving living conditions, improving access to financing – with a focus on small and medium enterprises and marginalized groups – and providing analytical support to prioritize public investments, focus social protection measures, and, to reform tariffs and subsidies for fiscal impact while protecting the poor.

2. Strengthening service delivery to protect the poor and vulnerable

Strengthening service delivery to protect the poor and vulnerable is another key area of the strategy. Moreover, it prioritizes the education sector, with the aim of improving learning outcomes in secondary education and skills building capacity to enter the labor market. It continues also to support the implementation of a universal healthcare coverage system in the provinces.

Enhancing the efficiency of public administration is another key area. It will do so by seeking to strengthen inter-jurisdictional coordination with the goal of improving basic public service delivery such as water and sanitation.

3. Supporting climate measures and long-term sustainable growth

The main objectives of this area are transitioning to a cleaner energy matrix, making the rural economy more climate smart, and supporting a resilient economy. This key area involves reducing local pollution, managing and protecting natural resources and biodiversity, and building a more sustainable economy.

Last Updated: Apr 03, 2023

Argentina has an active portfolio of 24 investment projects with US$7.55 billion in committed loans, a guarantee for US$466 million and two grants for an amount of US$10 million. The portfolio focuses on supporting programs in the areas of health, environment, education, infrastructure, labor market and social protection.

Between July 2022 and February 2023, the World Bank Board of Directors approved several projects, among which are:

• A US$300 million loan to reduce dropout rates in secondary and higher education.
• A US$150 million loan to support planned urban growth to enable more inclusive housing access.
• A US$ 200 million loan to support Argentina's digital transformation and the closing of the digital divide.
• A US$50 million loan to support social safety net programs in Buenos Aires Province. These include the electricity social tariff and food assistance programs, which reach over 1.7 million people.
• A US$200 million loan to promote sustainable growth in Argentina, driven by innovation and focused on the creation of technology-based companies, support for entrepreneurs and access to private capital.

In addition, in November 2022, the World Bank published the Climate and Development Report (CCDR) that identifies opportunities to strengthen resilience and decarbonize the economy by 2050.

This report adds to a series of analytical studies that the World Bank carries out to help achieve sustained poverty reduction in Argentina. Other recent reports focus on topics such as agriculture, environment, pensions, subsidies, and cities, among others.

Last Updated: Apr 03, 2023