Daily Management Review

Argentina Asks IMF For Early Release Of $50bn Bailout Fund


08/30/2018




Argentina Asks IMF For Early Release Of $50bn Bailout Fund
The Argentine government wants to ease concerns surrounding the possibility among investors and markets that the country might not be bale to serve its debt obligations for 2019 and hence the International Monetary Fund (IMF) has bene requested to ensure an early release of funds from a $50bn bailout deal by Argentina’s President Mauricio Macri.
 
Argentina had agreed with the IMF “to advance all necessary funds to guarantee compliance with next year’s financial programme”, Macri said in a televised address.
 
There had been “expressions of a lack of trust in the markets” about Argentina in the last week, Macri said. The decision to approach the IMF for the early release of the funds was taken to dispel any uncertainties, he said but did not provide any details about the amount wanted and the time frame requested for release of the funds.
 
Following a sharp depreciation of its currency and a run on the peso, Argentina was forced to strike a deal with the IMF earlier this year for a bail out fund. The aim of the three-year standby financing deal is to strengthen the position of the currency of the country and the weak economy and aid in the fight against inflation which touched 30 per cent and is amongst the highest in the world.
 
There was a fall again in the Argentine currency on Wednesday as it closed at an all-time low of 34.2 pesos against the US dollar.
 
It would “revise the government’s economic plan with a focus on better insulating Argentina from the recent shifts in global financial markets, including through stronger monetary and fiscal policies and a deepening of efforts to support the most vulnerable in society”, the IMF said in a statement.
 
IMF is not a very welcome agency in Argentina as most Argentinians carry with them bitter memories of the last time that the IMF had been invited in the country and it had forced the government to implement policies that led the country to its worst economic crisis in 2001. At the peak of the crisis, employment was at its peak as one of every five Argentinian got unemployed and millions of Argentines were thrown into poverty.
 
There has been acknowledgement by the IMF about strong mistakes that they had committed while handling the case in Argentina the last time around which led to the economic crisis. The Fund had concluded in a 2004 report by its internal audit unit that it had not been able to provide enough oversight, and had done an over estimation of growth and the potential for success of the economic reforms at the time that it had continued to lend Argentina money when its debt had become unsustainable.
 
(Source:www.theguardian.com)






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