IMF Approves $56 Billion Loan to Argentina
The International Monetary Fund (IMF) just approved a credit loan to Argentina for $56 billion in a joint effort to stabilize Argentina’s economy.
This concession comes just four months after the negotiation of an agreement that granted Argentina a three-year, $50 billion standby loan. Since the value of the peso continued falling even after the original loan, President Mauricio Macri felt forced to renegotiate the agreement.
Argentina has received $20 billion of the promised $56 billion so far.
Argentina finds itself trapped in an economic crisis, as more than 27 percent of the population is living below the poverty line and the unemployment rate is at a startling 9.6 percent. The Argentine peso has lost 50 percent of its value against the dollar since the beginning of this year and just lost 20 percent of its value in a span of two days.
The lower house of Congress passed an austerity budget which aims to mitigate the economic crisis. President Macri also introduced other austerity measures such as cutting the number of government ministries by half and raising export taxes.
Argentina’s budget deficit for 2017 was 3.9 percent of the country’s Gross Domestic Product (GDP). Argentina aims to reduce the deficit to 2.7 percent by the end of this year, and eliminate it completely by the end of 2019.
IMF Director Christine Lagarde stated that the passage of the 2019 government austerity measures approved by Argentina’s lower house of Congress “will be key to restoring confidence [in the economy].”
President Macri stated he will make cuts in the following sectors: health, education, science, transportation, public works, and culture. However, Argentina’s Finance Ministry shared that social programs will still receive more than 1.2 percent of Argentina’s GDP to “protect the most vulnerable sectors.”
An IMF official commented, “We expect the recession to continue for the rest of 2018 and into the first quarter of 2019, with a recovery to begin in the second quarter of next year.”
Despite the agreement between Argentina’s government and the IMF in regards to measures of austerity, these budget cuts have caused turmoil amongst the citizenry. Protesters showed up to the Congressional building in Buenos Aires to demonstrate against President Macri’s austerity budget under the slogan, “No to the IMF Budget. Don’t cut our future!”
Riot police responded with tear gas and rubber bullets.