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IMF approves next tranche of emergency loans to Argentina

April 1, 2023

The $5.4 billion set for disbursement brings the total lent to the Latin American country under the Extended Fund Facility to $28.9 billion. Argentina is the target of the IMF's largest assistance program.

Argentine pesos from a client buying U.S. dollars are counted by a machine at an illegal exchange location in Buenos Aires. 2015 archive image.
Argentina's economy has been under near-constant pressure for most of the century, inflation is currently in the region of 95% around 10 times higher than the unusual levels in much of the West in recent monthsImage: Victor R. Caivano/AP/picture alliance

The International Monetary Fund's executive board approved late on Friday the disbursement of $5.4 billion (approximately €4.97 billion) to Argentina, as part of a $44 billion loan program to the Latin American nation struggling with an ailing economy.

In a short statement, the IMF said the disbursement brings the total sum disbursed to Argentina to about $28.9 billion, as part of the Extended Fund Facility (EFF) for the country. Argentina is the target of the largest EFF assistance program currently being implemented by the IMF.

Why does Argentina need assistance?

Argentina's struggling economy has failed to significantly stabilize over the years.

Last week, Fitch Rating downgraded the country's foreign currency debt. It now stands one level above default, which makes the ratings agency suggest that a default is "imminent."

Fitch said it was reacting to a contentious government decree seeking to force domestic public sector entities to swap their debt denominated in foreign currencies to debts denominated in the Argentine peso. That, Fitch said, would equate to an effective default by its standards, given that the dollar value of credit would no longer be guaranteed. 

Argentina has defaulted on its debt nine times since its 1816 independence from Spain, and three times this century, with the largest default taking place in late 2001.

Although the country recorded roughly 5% economic growth in 2022, inflation was rampant, at roughly 95% year-on-year in 2022. That's almost 10 times higher than the peaks in the region of 10% recorded in Western economies in 2022 amid a spike in inflation. 

Argentina banks on IMF bailout

rmt/msh (AFP, Reuters)