IMF Plans to Help Argentina, If It’s on the Right Track

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The International Monetary Fund (IMF) will help the Argentinian economy and its people with a financial package of $50 billion. The deal is based on the agency’s belief that the current administration is taking the right direction. That will be the case, probably, until new elections or another economic downturn.

The IMF announced:

The Argentine authorities and IMF staff have reached an agreement on a 36-month Stand-By Arrangement (SBA) amounting to US$50 billion (equivalent to about SDR 35.379 billion or about 1,110 percent of Argentina’s quota in the IMF). This staff-level agreement will be subject to approval by the IMF’s Executive Board, which will consider Argentina’s economic plan in the coming days. The authorities have indicated that they intend to draw on the first tranche of the arrangement but subsequently treat the loan as precautionary.

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement on the staff level agreement:

“I congratulate the Argentine authorities on reaching this agreement. As we have stressed before, this is a plan owned and designed by the Argentine government, one aimed at strengthening the economy for the benefit of all Argentines. I am pleased that we can contribute to this effort by providing our financial support, which will bolster market confidence, allowing the authorities time to address a range of long-standing vulnerabilities. As part of this support, both the IMF and the Argentine government intend to work together to ensure steps are taken, and the resources are fully available, to protect the most vulnerable in the population as economic reforms move forward.”

The IMF already has considered Argentina’s economic plan, so the Executive Board’s action is guaranteed.

These arrangements always start with good intentions. President Mauricio Macri has been in office since December 10, 2015. The IMF is giving him the benefit of the doubt. On the other hand, the government of the country has been notoriously unstable. Two or three years from now, the IMF can see if it’s made a good decision.