Narayan AmmachchiThe International Monetary Fund (IMF) disbursed US$6 billion to Argentina under the $44 billion credit facility agreed upon in March 2022, with the bank’s officials expressing satisfaction at the government’s fiscal policy.
This is one of the biggest financial aid programs ever approved by the IMF. It also comes at a crucial time for Argentina’s government, which might have defaulted on another loan repayment had it not received the funds on time.
Despite better management of funds, “macroeconomic imbalances persist and conditions remain fragile”, stated Gita Gopinath, deputy managing director of the Fund in a press release.
The IMF Executive Board completed today the 3rd review of 🇦🇷 #Argentina’s Extended Fund Facility arrangement, which allows for an immediate disbursement of ~US$6 billion. https://t.co/vkQ4lS9vb5
— IMF (@IMFNews) December 22, 2022
She urged the government to cut spending on social welfare programs and reduce the public deficit in order to “alleviate financing pressures”.
Argentina’s foreign exchange reserves are improving somewhat, but the country lacks the tools to stimulate its economy, largely due to high external debt and inflation hovering around 90%.
With domestic spending continuing to decrease year after year, the government seems helpless to deal with the crisis. However, it is trying other options to cushion the impact of high consumer prices, including price caps.
The economic crisis is putting extreme pressure Argentina’s government, which swore in three finance ministers in a space of six months last year.
Meanwhile, the country’s central bank says economic growth could slow to less than 1% in 2023.
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