Argentina agrees to $50bn loan from IMF amid national protests
Last edited Fri Jun 8, 2018, 01:04 PM - Edit history (1)
The International Monetary Fund has stepped in to shore up the Argentine economy with a $50 billion stand-by loan agreement.
Argentina requested assistance from the international lender of last resort on 8 May after the peso weakened sharply in an investor exodus. The dollar has risen 40% against the peso so far this year - the worst among the emerging markets.
Economy Minister Nicolás Dujovne said he expected the IMF board to approve the deal during a meeting on 20 June. After that, he said he expected an immediate disbursement of about $15 billion.
As part of the deal, which is subject to IMF board approval, the government pledged to reduce current account and fiscal deficits – which reached a record $31 billion and $38 billion, respectively, in 2017 (5 and 6% of GDP).
Fiscal deficits have been exacerbated by corporate, wealth, and export tax cuts decreed by President Mauricio Macri in 2015. Macri's attempts to pay for the tax cuts by imposing pension cuts and utility rate hikes of over 1000% have met with popular protest.
Current account deficits, in turn, have been fueled by soaring imports, which have risen by 20% annually even as exports remain flat, as well as ballooning payments on the foreign debt, which rose $52 billion last year alone.
The deal marks a turning point for Argentina, which for years shunned the IMF after a devastating economic crisis in 2001-02 that many Argentines blamed on IMF-imposed austerity measures. That crisis was preceded in December 2000 by a similar, $38 billion IMF stand-by credit line.
"How nice it is to share good news!" then President Fernando de la Rúa announced on national television at the time. He fled the presidential offices by helicopter amid riots a year later.
At: https://www.theguardian.com/business/2018/jun/08/argentina-loan-imf-protests-peso
Former Argentine President Fernando de la Rúa and Macri: The helicopter club?
