On Friday, October 26th, the International Monetary Fund (IMF) has approved a loan package worth $56 billion for Argentina. This loan would help to stabilize the nation’s economy and currency.
The country had already received $15 billion and in June secured an IMF loan of $50 Billion. Since June the country’s condition worsened and Buenos Aires had to go to the IMF for additional support.
The IMF immediately released $5.7 billion to the Argentian government but it also includes tougher conditions. The latest installment was just over $20 billion which was released to President Maurico Macri’s government.
Christine Lagarde, the Managing Director of the IMF stated: “Despite the challenging environment the government has proactively strengthened its policy plans.”
In April this year, a rapid loss in the country currency led to a loss of confidence and this loss was due to a severe drought. Since the start of this year, the country currency lost 50% of its value against the dollar. In August, the Peso lost 20% of its value in just 2 days after the country’s President announced that he was renegotiating the IMF loan.
The IMF loan would be for 3 years where the government would need to cut down on its spendings and bring changes in the central bank policy. Authorities would be able to intervene if the peso falls at a fast pace and also would have to choke off inflation.