IMF bumps up Argentina bailout package
THE International Monetary Fund on Wednesday agreed to boost its crisis loan package aimed at restoring confidence in Argentina’s struggling economy by 14 per cent to $57.1 billion.
The agreement “will allow our country to leave behind the turbulent path of recent months,” said Argentina’s Finance Minister Nicolas Dujovne during a press conference with IMF Managing Director Christine Lagarde, on the sidelines of the United Nations General Assembly in New York.
Lagarde said the aim of the program was to help Argentina “tackle the challenges it faces” and provide more support the “most vulnerable people in society”.
Argentina originally secured a $50 billion loan back in June, when an initial $15 billion tranche was handed over.
However, last month, President Mauricio Macri revealed he had asked for an accelerated disbursement of the remaining $35 billion, with another $3 billion not due until November and the remainder over the next three years.
‘Strengthened plan’
The new deal “front loads IMF financing,” the Fund said in a statement, increasing by $19 billion the amount due to be made available up to the end of 2019: a total of $36.2 bil- lion, according to Argentina’s finance ministry.
The ministry said that part of the agreement, which needs to be approved by the IMF’s Executive Board, included a commitment to maintain “spending on social assistance . . . above 1.2 per cent of gross domestic product” in order to “protect the most vulnerable sectors”. But the news was met with scorn on the streets of Buenos Aires.
“We’re getting more in debt and not correcting our mistakes. We’re spending more than we can,” said 57-year-old Daniel Pacheco, who works for a telephone company. “Nothing will change because it’s the same politicians as always.”
Lagarde praised Argentina for its “strengthened economic plan that is aimed at bolstering confidence and stabilising the economy”.
“A central element of the authorities’ plan will be to reach budgetary balance by 2019,” she added.
The announcement of the agreement comes a day after Argentina changed its central bank president. Some analysts claimed outgoing head Luis Caputo was at odds with the IMF over Argentina’s monetary strategy, leading to his replacement by Guido Sandleris.
Lagarde said that “persistently high inflation continues to erode the foundation of economic prosperity in Argentina” and to tackle it, the country’s “authorities will shift towards a stronger, simpler and verifiable monetary policy regime”.