IMF agrees to $50 billion, made the loan for the Argentina

Reuters

The International Monetary Fund has decided to give Argentina up to $50bn (£37.2 billion) while the country is trying to strengthen its struggling economy.

The three-year agreement must still be approved by the board of directors of the IMF.

Argentina, which has been plagued by economic problems, for years, has asked the assistance of the IMF, on May 8th, after the currency hit a low.

The country is committed to address the double-digit inflation and public spending as part of the agreement.

“The [Argentine] authorities have indicated that they intend to draw on the first tranche of the agreement, but subsequently treat the loan as a precaution,” the IMF said in a statement on Thursday.

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The argentine President Mauricio Macri’s decision to ask the IMF for help, criticized by many within his country.

The IMF is widely loathed and blamed for Argentina’s 2001 economic collapse, after having pulled the plug on the country and denied financial support.

But Mr. Macri had said before a new loan from the Fund would enable the government to strengthen a program growth and development “that gives us more support to deal with this new global scenario and to prevent the recurrence of crises like the ones we have had in our history”.

Managing director of the IMF, Christine Lagarde, congratulated the Argentine authorities to reach an agreement.

“As we have stressed before, this is a plan owned and designed by the Argentine government, designed to strengthen the economy, to the benefit of all Argentines,” mrs Lagarde said.

“I am pleased that we are able to contribute to this effort by providing financial support, which will help to strengthen the confidence of the market, allowing the authorities time to deal with a wide range of long-standing vulnerabilities.”
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Analysis

BBC South America correspondent Daniel Gallas

It may seem like the Argentina and the IMF, are on opposite sides of the negotiations.

But in reality they both want the same thing.

Both Mauricio Macri and Christine Lagarde wants to cut public expenditure to reduce inflation – the highest among the economies in the G20.

$50 billion, realized rates will Argentina move more quickly with his reforms.

You will have to reduce its budget deficit to zero by 2020, a year earlier than he had promised.

The IMF is also aware of its nefarious reputation in a country that still blames the Bottom for his troubles.

So is including a clause in the pact to allow the government to spend money for social programs, if deemed necessary.

The IMF board is expected to vote on the agreement in the coming days in Washington.

Alejandro Werner, director of the IMF’s Western Hemisphere Department and mr. Roberto Cardarelli, mission chief for Argentina, will face a press conference in Washington later on Friday.