Argentina government seeking $20 billion IMF loan

Argentina government seeking $20 billion IMF loan

BUENOS AIRES
Argentina government seeking $20 billion IMF loan

Argentina has sought a $20 billion loan from the International Monetary Fund, the country's Economy Minister has said, as the government struggles to hold on to foreign reserves while propping up an ailing currency.

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In addition to the $20 billion IMF request, Luis Caputo said Argentina, the IMF's biggest debtor by far, was negotiating an additional package with other organizations such as the World Bank and Inter-American Development Bank (IDB).

President Javier Milei's government announced the preliminary figure amid a run on the peso, prompted by fears of a possible devaluation, that drained reserves by more than $1.2 billion last week.

The proposal must be approved by the board of the IMF, whose spokeswoman Julie Kozack said on March 27 that discussions with Argentina, including for a "sizable financing package," were "very advanced."

She did not provide a figure for the size of the package.

Caputo said the IMF loan would "not be used to finance expenses" but to recapitalize the Argentine central bank.

Argentina has been a serial defaulter in recent decades, and the IMF has bailed out South America's second-biggest economy 22 times in the past.

Self-described "anarcho-capitalist" Milei came to office in December pledging to cut spending, tame inflation and fix a steep fiscal deficit.

In the last six months, the peso has fallen about ten percent to the US dollar.

The new loan will add to the existing $44 billion Argentina already owes the IMF under a deal signed in 2018 for the bank's biggest-ever loan.

Argentina has one of the highest inflation rates in the world, but under Milei it has fallen from 211 percent year-on-year at the end of 2023 to 84.5 percent in January.

The president has said a new IMF deal will help ensure that "inflation is only a bad memory."