After months of negotiations over a new loan deal, Argentina and the International Monetary Fund (IMF) have achieved a breakthrough. “We have reached an agreement with the IMF,” said Argentine President Alberto Fernández. The Monetary Fund confirmed the agreement. The new agreement, which will run for two and a half years, still has to be approved by the IMF’s Executive Committee and Argentina’s Congress.
“We have a serious problem and now we have a reasonable solution,” said Fernández. The agreement does not oblige Argentina to cut social spending and investments or to devalue the peso. According to the IMF, however, the energy subsidies are to be cut and the financing of government spending via the printing press reduced. In addition, inflation is to be significantly reduced from the current level of around 50 percent.
In return, Argentina will be given more time to repay its debt. In 2018, the IMF granted Argentina the largest loan in its history of $57 billion. The South American country is currently in debt to the IMF for about 44 billion US dollars (39.3 billion euros). Around $19 billion would have to be repaid this year. In view of the sluggish economy and high inflation, the country cannot cope. On Friday alone, $718 million was due.