LONDON,  - Argentina's preliminary deal with the International Monetary Fund is set to combine reviews of its $44 billion loan programme, according to four sources, potentially paving the way for streamlining payments to the cash-strapped country.

Latin America's third biggest economy has been seeking to bring forward some of the IMF disbursements scheduled for this year, as the country battles a severe financial crisis that could worsen further due to a lack of international reserves.

Argentine government officials have been trying to reach a so-called Staff Level Agreement with the IMF that would cover the country's progress in relation to the fund's fifth and sixth reviews of a 2022 loan, the sources added, asking not to be named because the talks are private. Each review covers three months.

Combining the two reviews would give Argentina access to 5.5 billion of IMF's special-drawing rights (SDRs), equivalent to about $7.3 billion. But it is not clear if merging the reviews would automatically lead to a combined payment, what the IMF calls a rephasing of disbursements.

The move comes after fifth review talks were delayed amid discussions over some economic measures needed to maintain IMF disbursements. These included the introduction of more peso exchange rates to safeguard reserves.

A spokesperson for the Economy minister didn't immediately reply to a request for comment.

An IMF spokesperson said: "Discussions between the teams continue to be very constructive" and "are aimed at reaching staff level agreement."

Once a Staff Level Agreement is reached, this is presented to the IMF executive board and if it is signed off, this will trigger the release of cash.

Argentina's fifth review -- linked to a $4 billion payment - was set to be completed in June but negotiations on a agreement were delayed due to IMF "prior action" demands on Buenos Aires, one of the sources added, without providing any further details.

Prior actions are measures a country needs to implement before the Fund signs off on a revision of a programme or a loan programme.

The sixth review - linked to a $3.3 billion payment - was originally planned for September, but can be brought forward because the required second-quarter data is already available.

The Fund has merged reviews before with other programmes. Earlier this year, the Fund combined reviews for Uganda and Nepal, and also a year ago with Pakistan.

LONG AWAITED DEAL

Both sides have recently said that a Staff Level Agreement was close.

Timing is tricky for Argentina. The IMF board won't be able to convene before the summer recess in the first half of August, so the final approval and disbursements would arrive later next month, two sources said.

The country urgently needs to find financing to pay back some $3.4 billion it owes to the IMF on a 2018 loan and which is due in the coming days.

To avoid a default with the multilateral lender, it needs to pay $2.6 billion on July 31 and almost $800 million on Aug. 1.

With no liquid currency reserves, Buenos Aires may need to use a swap line with Beijing. Argentina used $1.1 billion in yuan from a recently extended and expanded swap line with China's central bank to complete its June payment to the IMF.

Facing a recession and triple-digit inflation, Argentina is scheduled to have four reviews between December and September 2024 on its IMF programme.

(Reporting by Jorgelina do Rosario, editing by Karin Strohecker and Jane Merriman)