14:46 | 31/08/2018 Global Economy
President Mauricio Macri says ‘lack of trust from the markets’ forces him to ask for help as peso weakens and inflation runs at 30 percent.
|A demonstrator holds an anti-IMF sign during a protest against the G20 Meeting of Finance Ministers in Buenos Aires, Argentina in July - Photo: Reuters|
Argentina’s President Mauricio Macri has asked the International Monetary Fund for an early release of funds from a US$50bn deal to ease concerns that the country will not be able to meet its debt obligations for 2019.
Macri said in a televised address that Argentina had agreed with the IMF “to advance all necessary funds to guarantee compliance with next year’s financial program”.
Macri said that in the past week there had been “expressions of a lack of trust in the markets” about Argentina. He said the decision sought to dispel any uncertainty, but he did not specify the amount or when the funds would be released.
Argentina was forced to strike a deal with the IMF earlier this year after a sharp depreciation of its currency and a run on the peso. The three-year standby financing deal is aimed at strengthening its weak economy and helping it fight inflation, which at 30 pct per year is one of the highest rates in the world.
The Argentinian currency fell again Wednesday to close at an all-time low of 34.2 pesos per US dollar.
The IMF said in a statement that 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”.
Most Argentinians have bad memories of the IMF and blame the international lending institution for encouraging policies that led to the country’s worst economic crisis in 2001. It ago resulted in one of every five Argentinian being unemployed and millions sliding into poverty.
The IMF has admitted it made a string of mistakes that contributed to the problems. A 2004 report by the IMF’s internal audit unit concluded it failed to provide enough oversight, and overestimated growth and the success of economic reforms, while it continued to lend Argentina money when its debt had become unsustainable.