IMF gives Argentina $57bn loan to help halt peso fall

The International Monetary Fund increased their three-year loan to Argentina to $57bn to support the sliding peso.

The agreement which would be the biggest loan in the history of the IMF still needs the approval of the Executive Board. This would bring the total amount available under the program to $57.4bn by the end of 2021, up from $50bn.

IMF Managing Director Christine Lagarde said at a news conference in New York on Wednesday the Fund was “significantly frontloading” disbursements under the program. It will boost the financing available through the end of next year by $19bn, she said.

“We are pleased to see a firm commitment [by the Argentine government] to the expansion of social protection,” she commented, saying it was a “key priority” for the IMF. “We stand by Argentina,” she added.

The managing director said that a lot of work remained to be done for Argentina to respond effectively to the problems it faces, although Mauricio Macri has promised to balance the budget next year.

The loan comes with conditions, including a commitment to a zero deficit for 2019. It will also only allow Argentina’s central bank to intervene to stabilize its currency if the peso depreciates below 44 pesos to the dollar. It is currently at 39 pesos to the dollar after losing 50% of its value since the start of the year.

The central bank has spent nearly $16 billion in reserves to try and lift the peso in 2018, using a large share of the dollars disbursed by the IMF so far.

The deal was announced just days after the president for Argentina’s central bank, Nicolás Caputo resigned unexpectedly.