Argentina gets biggest loan in IMF’s history at $57bn

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Strict restrictions on funds include commitment to zero deficit for 2019 and limits on central bank actions

Argentina has received the biggest loan package ever from the International Monetary Fund, aimed at shoring up the countrys ailing finances: a whopping $57.1bn that will be disbursed over the next three years.

This is the biggest loan in the history of the IMF, said the funds director, Christine Lagarde, on Wednesday as the final loan agreement was announced in New York.

The loan $15bn of which has already been received by Argentina comes with stringent conditions, including a commitment to a zero deficit for 2019.

Argentina had initially secured $50bn in a deal worked out in June after the South American country was battered by a currency crisis, a run on the peso and double-digit inflation.

The economy minister, Nicols Dujovne, said that at the last minute the IMF agreed to increase the lending package by $7.1bn.

Lagarde said that as part of the deal, Argentinas central bank had agreed to intervene in currency markets only in case of extreme circumstances and that the new amount would help Argentinas government face its challenges.

The agreement will only allow Argentinas central bank to intervene to stabilize its currency if the peso depreciates below 44 pesos to the dollar. It is currently at 39 pesos to the dollar after losing 50% of its value since the start of the year.

The deal was announced just a day after the president of Argentinas central bank, Nicols Caputo, resigned unexpectedly, reportedly after disagreements with the IMFs guideline limiting the banks future intervention to rescue the peso.

Thousands of Argentinians joined in a nationwide strike on Tuesday to protest against economic turmoil and Mauricio Macris austerity measures.

Most Argentinians blame the international lending institution for encouraging policies that led to the countrys worst economic crisis, in 2001, which pushed millions into poverty.

The IMF has admitted it made a string of mistakes that contributed to the economic implosion.

A 2004 report by the IMFs internal audit unit concluded it failed to provide enough oversight and overestimated growth and the success of economic reforms, while it continued to lend Argentina money when its debt burden had turned unsustainable.

Read more: https://www.theguardian.com/world/2018/sep/26/argentina-imf-biggest-loan

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