After four months of negotiations, the International Monetary Fund (IMF) has approved a loan tranche of 7.5 billion US dollars (6.9 billion euros) for Argentina. This was announced by the Executive Committee of the IMF in Washington on Wednesday.
Due to an extreme drought and political mistakes, Argentina failed to make the agreed budget adjustments, the fund criticized. However, agreement was reached on new goals such as increasing the reserves of the central bank and more fiscal discipline.
Financial and economic crisis in Argentina
However, the Ministry of Economy in Buenos Aires has to pass on more than half of the funds that have now been paid out to other creditors, as the newspaper “La Nación” reported. Argentina recently took out several bridging loans in Qatar, China and the Latin American Development Bank (CAF) to meet its interest rate obligations to the IMF.
In 2018, the IMF granted Argentina the largest loan in its history of $57 billion. The South American country currently owes around 44 billion US dollars to the IMF. Individual tranches are released after technical reviews, during which Argentina must demonstrate that it has implemented the reforms required by the IMF.
Argentina has been in a severe financial and economic crisis for years. The inflation rate is 115 percent. The country suffers from a bloated state apparatus, low industrial productivity and a large informal economy that deprives the state of much tax revenue. The national currency, the peso, continues to depreciate against the US dollar, and the mountain of debt is constantly growing.
