The International Monetary Fund reached an agreement with Argentina that will allow release of the next US$5.4 billion disbursement under the loan program intended to help stabilize the nation’s economy.
The IMF board must approve the fourth review of the country’s performance under the loan deal signed last year before Buenos Aires will have access to the additional funds. The board meeting is set for July 12.
“Argentina’s economic policies are yielding results,” acting IMF chief David Lipton said in a statement, noting that the government achieved all the targets agreed with the fund including on budget policy and social spending.
“I fully support Argentina’s efforts to bolster confidence, lay the foundation for sustainable growth and protect the most vulnerable.”
While inflation remains high it “is expected to continue to fall in the coming months,” Lipton said. “There are also signs that the economy is improving in the second quarter.”
President Mauricio Macri has faced increasing pressure over the misfiring economy with presidential elections set for October. He was forced to impose austerity measures as authorities struggled to stabilize the currency and rein in inflation to ensure access to IMF funding.
Consumer inflation hit 3.1% in May and has risen more than 19% so far this year, while unemployment closed last year just over 9% and the poverty rate rose to 32%.
Argentina originally secured a US$50 billion financing package from the IMF in June 2018, before returning to the fund to ask for an additional US$6 billion and accelerated disbursements in exchange for tougher conditions.
Christine Lagarde, the recently departed IMF chief, admitted last month that the crisis-lender had “underestimated” the severity of Argentina’s “incredibly complicated” economic challenge.