IMF boosts Argentina loan to $57B

new york/buenos aires — The International Monetary Fund increased its three-year lending programme with Argentina by $7 billion to $57 billion, on the condition that the central bank halted full-scale interventions to support the ailing peso.

IMF managing director Christine Lagarde, speaking at a news conference in New York alongside Argentine Economy Minister Nicolas Dujovne, said the Fund was “significantly frontloading” disbursements under the programme. It will boost the financing available through the end of next year by $19 billion, she said.

Argentina has been at the center of emerging market turmoil this year after a drought plunged Latin America’s third-largest economy into recession.

Investor fears that Argentina would not be able to service its foreign debt in 2019 have made the peso one of the world’s worst performing currencies this year. It has lost more than 50 per cent of its value in 2018.

Lagarde said that Argentina’s central bank had agreed as part of the deal to allow the peso currency to float freely and would only intervene in the forex market in extreme circumstances. The central bank has spent nearly $16 billion in reserves this year in a failed attempt to prop up the peso, using a large share of the dollars disbursed by the IMF so far.

“In the event of extreme overshooting of the exchange rate the central bank may conduct a limited intervention to prevent disorderly market conditions,” Lagarde told reporters. —