IMF approves next tranche of emergency loans to Argentina
The executive board of the International Monetary Fund approved on Friday night the disbursement of US$5.4 billion (approximately €4.97 billion) to Argentina, as part of a US$44 billion loan program for the country. Latin American struggling with a struggling economy.
In a brief statement, the IMF said the disbursement brings the total sum disbursed to Argentina to about $28.9 billion as part of the Extended Fund Facility (EFF) for the country. Argentina is the target of the largest EFF assistance program currently implemented by the IMF.
Why does Argentina need help?
Argentina’s struggling economy has failed to stabilize significantly over the years.
Last year’s economic growth was 5.2%, a slowdown from 2021 but still expanding for the second straight year. However, the high inflation of 94.8% nullified this expansion.
Last week, Fitch Rating downgraded the country’s debt in foreign currency. It is now one notch above default, which causes the ratings agency to suggest that default is “imminent”.
Fitch said it was reacting to a contentious government decree that sought to force domestic public sector entities to swap their debt denominated in foreign currencies for debt denominated in Argentine pesos. That, Fitch said, would amount to an effective default by its standards, as the dollar value of the credit would no longer be secured.
Argentina has defaulted on its debt nine times since independence from Spain in 1816, and three times this century, with the biggest default occurring in late 2001.
Although the country recorded economic growth of approximately 5% in 2022, inflation has run rampant, at around 95% year-on-year in 2022. This is nearly 10 times higher than the peaks in the region of 10% seen in Western economies. in 2022 amid a spike in inflation.
Source: DW
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.