BUENOS AIRES – The economic crisis that hit Argentina seems to worsen. President Mauricio Macri has requested an early release of US$50 billion from the International Monetary Fund (IMF). As the Argentine peso dropped around 8% due to the hike of the dollar price, the president tried to obtain a tranche of the loan that caused an outcry in the country months ago.
As the Argentine peso lost more than the 40%, inflation has spiked. Now, President Mauricio Macri has asked the International Monetary Fund to release US$50 billion to counter the growing economic crisis.
The loan was expected to be used during the 2020-2021 economic agenda. However, the IMF agreed to give the money for 2019, as the government is concerned about whether Argentina will be able to meet its debt obligations for the term. Besides, the inflation rate runs at 30% per year, one of the highest in the world.
This Wednesday, Macri said that “we have agreed with the International Monetary Fund that we will advance all necessary funds, needed to guarantee the compliance of the next year’s financial programme. The decision seeks to dispel any uncertainty that could arise”.
The president also said that “guaranteeing the 2019 financial programme will allow us to fortify the trust in the Argentine economy, and to retake the economic growth path as soon as possible.”
The IMF said on Wednesday that the organization is looking to strengthen the arrangement with Argentina. “I gave my support for Argentina’s policy efforts. We will assist the government in developing its revised policy plans,” IMF head Christine Lagarde said.
My statement today on talks with Argentina: pic.twitter.com/PhzbdWjaVF
— Gerry Rice (@IMFSpokesperson) August 31, 2018
What’s in the IMF deal?
With the loan, Argentina could reduce its budget deficit. The release of the US$50 billion would also help to tackle the rampant inflation. According to CNN, the agreement includes “stand-by” borrowing, a flexible credit that enables the IMF to rapidly supply the financial needs of countries, and to backup policies to come out of the crisis.
The deal will last 36 months, and although it comes with low interest, the country will have to adjust economic policies. The IMF will monitor closely if the country complies.
Anger among Argentinians
In May, Argentinians took to the streets to protest IMF economic policies. According to news outlet France 24, unions, artists, and other citizens marched against more fee hikes for public services, demanded salary adjustments, the reform of the retirement system, and other measures to alleviate the deep crisis.
Editor-In-Chief Boris van der Spek is the founder of Chile Today.