WASHINGTON, Aug 24 (NNN-AGENCIES) — The International Monetary Fund (IMF) has released a loan tranche of US$7.5 billion (RM35 billion) for Argentina, in a deal that took four months to negotiate.
The IMF Executive Board announced the deal in Washington on Wednesday.
“The IMF Executive Board completed Wednesday the fifth and sixth reviews of Argentina’s 30-month Extended Fund Facility (EFF). The Board’s decision enables an immediate disbursement of around US$7.5 billion,” the IMF said in a statement.
Due to an extreme drought and political mistakes, Argentina had failed to make the agreed budget adjustments, the fund said. However, it was possible to agree on new goals such as increasing the reserves of the central bank and more fiscal discipline.
The Ministry of Economy in Buenos Aires has to pass on more than half of the newly disbursed funds to other creditors, the newspaper “La Nación” reported.
In order to meet its interest obligations to the fund, Argentina had recently taken out several bridging loans in Qatar, China, and from the Latin American development bank CAF.
The second-largest economy in South America is mired in a severe economic and financial crisis.
Argentina suffers from a bloated state apparatus, low productivity in industry, and a large shadow economy that deprives the state of much tax revenue.
The national currency, the peso, continues to depreciate against the US dollar, and the mountain of debt is constantly growing. The inflation rate is soaring at 115 per cent. — NNN-AGENCIES
