March 23, 2023

Argentina receives the largest loan package ever from the IMF At $57.1 billion

From WN

Argentina received the biggest loan package ever from the International Monetary Fund on Wednesday to help restore the country’s financial systems with $57.1 billion which will be distributed over the next three years, according to The Guardian.

Argentina has already received $15 billion of the loan, which comes with heavy restrictions, including the commitment to achieve a zero deficit by 2019.

“This is the biggest loan in the history of the IMF,” said IMF director Christine Lagarde when the final agreement for the loan was announced in New York.

Buenos Aires secured the $50 billion in a deal worked out earlier this year in June after the country was hit by a massive currency crisis, leading to double-digit inflation and the still struggling peso.

Lagarde said the “persistently high inflation continues to erode the foundation of economic prosperity in Argentina” and the government plans to “shift towards a stronger, simpler, and verifiable monetary policy regime.”

She also said Argentina would “contain the supply of money, and keep short-term interest rates at their currently” world-high level of 60 percent, in order to decrease inflation, which is anticipated to reach nearly 40 percent by the end of 2019.

Argentina’s economy minister Nicolás Dujovne said the IMF agreed to extend the aid package by $7.1 billion at the last minute.

He also said Argentina’s central bank agreed to intervene in currency markets for extreme circumstances and that new amount would help the government to address the challenges posed by the financial crisis.

The agreement stipulates that Argentina’s central bank only has the option to intervene if the peso depreciates below 44 pesos to the dollar.

The peso is currently at 39 pesos to the dollar after losing 50% of its value since January 2018.

The deal was announced just after Nicolas Caputo, the former president of Argentina’s central bank, resigned due what he described as personal reasons.

Later reports said his resignation was over disagreements with the IMF’s guideline limiting the bank’s future intervention to rescue the peso.

One of the largest unions in Argentina staged a nationwide strike on Tuesday to protect the ongoing economic strike in the country and the austerity measures implemented by Argentine President Mauricio Macri.

Christine Lagarde

I had a very good meeting with President Macri. We are close to the finish line in terms of reaching a revised staf…

Christine Lagarde
#Argentina has developed a strengthened economic plan that is aimed at bolstering confidence and stabilizing the ec…

The Guardian
Argentina gets biggest loan in IMF’s history at $57bn

The Treasury Ministry said the strike would lose 31.6 billion pesos ($800 million) in economic output, nearly 0.2 percent of Argentina’s gross domestic product.

The main agricultural port of Rosario was also shuttered by the strike since private freight shippers and public transportation service workers participated in the strike.

Many citizens in Argentina blame the international lending institution for enabling the government to implement policies which furthered the economic crisis in 2001 which pushed millions of Argentinians into poverty.

The IMF previously admitted it did make mistakes during that economic crisis, including a 2004 report from its internal audit unit which said it failed to provide sufficient oversight, overestimated growth, and the success of the economic reforms., Maureen Foody

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