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IMF Approves $5.4 billion to Argentina after completing Fourth review of Standby Credit Deal

 

The International Monetary Fund (IMF) executive board successfully completed the fourth examination of Argentina’s economic performance within the Stand-By Arrangement (SBA) of 3 years that was sanctioned on June 20th, last year.

This completion of the fourth review will allow officials to ship around $5.4 billion to Argentina through a loan program that will help secure the economy of Argentina.

On Friday, the IMF mentioned that it would release SDR 3.9 billion in cash to the country.

Earlier, in June 2018 IMF financing contract sanctioned around $57 billion and this new installment is part of it.

Managing Director of IMF, David Lipton in a statement mentioned, “The Argentine authorities continue to show a strong commitment to their economic policy program, meeting all applicable targets under the Fund-supported program.” Adding: “While it has taken time, these policy efforts are starting to bear fruit. Financial markets have stabilized, the fiscal and external positions are improving, and the economy is beginning a gradual recovery from last year’s recession. The Fund is strongly supportive of these important policy efforts.”

The new installment might help President of Argentina, Mauricio Macri to embattle as he aims to cool markets and increase investors trust before the first round of presidential elections, scheduled in October. Macri is looking for the second term as President.

He further mentioned the economy is starting to recover from the 2018s recession.

The government of Argentina has regularly shown its dedication towards fiscal and has overcome its fiscal targets of March and June. He stated:

“The officials have asked the IMF to support raising the end-September primary balance targets as a signal of their priority of ensuring that Argentina’s debt-to-GDP ratio is placed decisively on a downward path.”

Lipton added, the Argentine government managed to fulfill its fiscal targets, simultaneously safeguarded social programs and used fiscal tools to protect the most unprotected from the recession impacts. The officials have also asked the IMF to help in promoting social spending floor to include assistance programs meant for adults having no children and women having less income. These efforts will boost the scope of social safety and promote gender equality.

Argentina President Macri has been under immense pressure for economic failure and was forced to implement tough steps as officials faced difficulties in stabilizing the currency and check inflation to guarantee IMF funding access.

The consumer inflation in May reached at 3:1 percent and has increased by 19 percent till July 2019.  In 2018, unemployment reached more than 9 percent, and the poverty rate increased to 32 percent.

The present government of Argentina hopes inflation to end in 2019 within 40.3 percent. In May the inflation reached at 57 percent.

Moody- American based credit rating agency on Friday changed the view of Argentina from steady to negative.

Moody’s decision was according to growing uncertainty that the country would introduce policies that would balance its currency and economy, in a statement Moody mentioned.

Lipton stated more measures are required to restructure tax system, to grow competition within local markets, and in-depth measure to improve governance, and address corruption. Such amendments will have significant potential to increase the growth potential of Argentina, create more employment, decrease poverty, and enhance the living standard of all people across Argentina.

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