IMF approves $5.4b for cash-strapped Argentina

The International Monetary Fund’s (IMF) executive board on Friday announced a $5.4 billion disbursement to crisis hit Argentina, part of a $44 billion loan program. The South American nation has been facing a severe economic panorama due to higher inflation.

Argentina is the target of the largest assistance program currently under IMF implementation.

The new disbursement brings to $28.9 billion the total funds already allocated to the Latin American country since the start of the assistance program in March 2022.

Argentina recorded 5.2% economic growth in 2022, a slowdown compared to 2021, but still tallying a second consecutive year of expansion, the first such two-year period of growth since 2010-2011.

Inflation, however, remained high at 94.8%, preventing the country from reaping the benefits of this upturn in activity.

The soaring inflation means most goods cost double what they did this time in 2022 and marks the return of near triple-digit inflation for the first time since the early 1990s.

A week ago Fitch Ratings downgraded Argentina’s foreign currency debt to one level above default.

The debt downgrade from CCC- to C suggests that the ratings agency believes a default is ‘imminent,’ and comes shortly after a government decree forcing domestic public sector entities to swap their foreign currency-denominated debt for debt denominated in the domestic currency, the peso.

Argentine President Alberto Fernandez held an Oval Office meeting with US President Joe Biden two days ago in which he thanked Biden for US support for loans at multilateral lending agencies like the IMF.

The United States is the nation with the greatest voting rights at the IMF.

The agreement signed in March 2021 between the IMF and Argentina, the 13th between the institution and the South American country since 1983, sets benchmarks for the country to deal with chronic inflation.