The IMF approves a disbursement to Argentina of 7,500 million dollars

IMF approves a disbursement to Argentina

The executive board of the International Monetary Fund (IMF) “approved the disbursement of 7.5 billion dollars” corresponding to the fifth and sixth revision of the agreement with Argentina, a spokesman for Argentine Economy Minister Sergio Massa reported on Wednesday.

The IMF has not yet confirmed the information.

“It was unanimous,” said a spokesman for the minister and presidential candidate for the ruling Peronism, in a message transmitted to journalists by WhatsApp.

The South American country has signed a credit program with the IMF under which Argentina receives 44 billion dollars over 30 months in exchange for the central bank increasing its international reserves and the government reducing the fiscal deficit.

Massa will meet in the afternoon with the director of the Fund, Kristalina Georgieva, with whom he hopes to “review the entire disbursement procedure” because his country is experiencing the “perhaps most tragic year in terms of the economy” due to the impact of the drought, according to what he pointed out. on Tuesday.

The negotiation of the agreement between the technical team of the financial organization and Buenos Aires was uphill and was not achieved until July after weeks of arduous negotiations.

So, to honor its debt commitments in August, Argentina had to resort to a loan from Qatar, yuan from a swap (currency exchange) in force with China and a bridge loan from the Andean Development Corporation (CAF ).

Of the 7,500 million, the country will therefore have to send a part to Qatar, China and the CAF and keep another as provisions for the next maturities. The seventh review will take place in November.

In July, the IMF stated that both parties agreed to “a package of policies” to rebuild reserves and improve fiscal sustainability”, without neglecting social spending in a country with around 40% of the population living in poverty.

Shortage of reserves 

Argentina, with inflation above 100% per year, is going through a severe shortage of international monetary reserves amid a great demand for dollars, a currency that Argentines turn to as a refuge from rising prices.

Massa said on Tuesday that “in the last 21 days (they) have accumulated 1.7 billion dollars” of reserves.

The minister, one of the three candidates with a chance of being elected president in the October elections based on the results of the August primaries, blamed the IMF on Tuesday for having aggravated inflation by forcing the country to devalue its currency, but he is confident that prices drop in September and October.

The Central Bank of the Argentine Republic (BCRA) devalued the peso by around 20% against the dollar one day after the primary elections on August 13, in which the opposition won. The far-right liberal Javier Milei, a supporter of the dollarization of the economy, won 30% of the vote.

The governing Peronism obtained 27% of the votes and Massa was the chosen candidate to contest the Presidency.

The Fund applauded both the devaluation and the rise in benchmark interest rates, measures it considers steps in the right direction.

During his two-day visit to Washington, Massa met with senior US government officials and international organizations such as the World Bank and the Inter-American Development Bank (IDB), which have pledged to lend a total of $1.3 billion to Argentina for project development specifics.