Argentina asks IMF to release $50bn loan as crisis worsens

International Desk: Argentina's government has unexpectedly asked for the early release of a $50bn (£37.2bn) loan from the IMF amid a growing economic crisis.

President Mauricio Macri said the move was designed to restore confidence in the Argentine economy.

The Argentine peso has lost more than 40 per cent of its value against the US dollar this year and inflation is rampant.

The IMF confirmed on Wednesday it was looking to strengthen the arrangement and changing its phasing.

"I stressed my support for Argentina's policy efforts and our readiness to assist the government in developing its revised policy plans," Christine Lagarde, the International Monetary Fund's managing director, said in a statement.

Investors are concerned Argentina may not be able repay its heavy government borrowing and could default.

Correspondents say the decision to speed up the IMF bailout smacks of growing desperation.

When the terms of the loan were agreed in May, President Macri said he expected the economy to recover and did not plan to use the money.

The world's highest interest rates and backing from the IMF have failed to reassure investors.

The Argentine peso is still losing value despite all attempts to meet investor concerns.
Other emerging markets such as Turkey and Brazil are also suffering from the devaluation of their currencies this year, but Argentina's situation is particularly troublesome.

The country has not been able to lower inflation, which is the highest amongst G20 nations. And the government is failing to enact the economic reforms it promised the IMF, most of them aimed at curbing public spending and borrowing.

President Macri was elected on the promise of reviving the economy, but so far it seems little progress has been made.

Everyday life is getting more expensive for Argentines, as the prices of many goods and services still bear a close relation to the US dollar.

And the combination of spiralling inflation and public spending cuts means wages are not keeping pace with prices, making most people poorer.

Source: BBC



risingbd/Aug 30, 2018/Mukul