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By: Aldo Leporati
Argentina has agreed a us$57.1 B deal with the International Monetary Fund (IMF) designed to stabilise its economy. The new IMF agreement boosts the total funding available from the fund by us$7.1 B and frontloads financing, increasing available resources by us$19 B through the end of 2019. The funding provided through the agreement would be used by Argentina for budget support. Finance Minister Nicolás Dujovne is "confident" and says that "this time the great countries of the world have decided to support us".
IMF Managing Director Christine Lagarde said: “Argentina has developed a strengthened economic plan that is aimed at bolstering confidence and stabilizing the economy. “A central element of the authorities’ plan will be to reach budgetary balance by 2019, one year earlier than previously intended, and to move to a 1% primary surplus in 2020. “These decisive steps will reduce the government’s financing needs and bring down public debt. Congressional approval of the 2019 budget will be an essential next step.”
In a statement Lagarde said: “To tackle inflation, the authorities will shift towards a stronger, simpler, and verifiable monetary policy regime, replacing the inflation targeting regime with a monetary base target. “This new framework will contain the supply of money, and keep short-term interest rates at their currently high levels, aiming to bring down inflation and inflation expectations decisively and rapidly.”
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