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IMF increases Argentina crisis loan from US$50b to US$57b
[NEW YORK] The International Monetary Fund has agreed to increase its crisis loan package aimed at restoring confidence in Argentina's struggling economy by US$7 billion to US$57 billion, the South American country's finance minister Nicolas Dujovne said on Wednesday.
The agreement "will allow our country to leave behind the turbulent path of recent months," said Mr Dujovne during a press conference with IMF managing director Christine Lagarde, on the sidelines of the United Nations General Assembly in New York.
Ms Lagarde said the aim of the programme was to help Argentina "face its challenges" and support the most vulnerable populations.
Argentina originally secured a US$50 billion loan back in June, when an initial US$15 billion tranche was handed over.
However, last month, President Mauricio Macri revealed he had asked for an accelerated disbursement of the remaining US$35 billion, with another US$3 billion not due until November and the remainder over the next three years.
The new deal "front loads IMF financing," the Fund said in a statement, increasing by US$19 billion the amount due to be made available up to the end of 2019.
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.
Ms 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."
She said Argentina would "contain the supply of money, and keep short-term interest rates at their currently" world-high level of 60 per cent, aiming to rapidly bring down inflation, expected to hit 40 per cent by the end of the year.
Argentina's economic woes were brought on by a rapid loss of confidence in its peso currency from April.
It has lost around 50 per cent of its value against the dollar since the start of the year, including 20 per cent in a two-day period in August after Mr Macri announced he was seeking to renegotiate the IMF loan.
He has since introduced hugely unpopular austerity measures, including halving the number of government ministries and restoring taxes on grain exports.
The peso has largely stabilised since its August slump, although it lost 2.2 per cent on Tuesday following Caputo's resignation.