The International Monetary Fund (IMF) has approved a $44bn extended arrangement for Argentina to help the country tackle high inflation, acknowledging that the move comes with “exceptionally high” risks.
“The Executive Board of the International Monetary Fund (IMF) approved today a 30-month extended arrangement under the Extended Fund Facility (EFF) for Argentina amounting to SDR 31.914 billion (equivalent to US$44 billion, or 1000 per cent of quota),” a statement from the fund said, adding that around $9.7bn of the funding would be made available immediately.
The agreement is the 22nd assistance program put in place by the IMF for Argentina, and replaces a failed $57bn program implemented in 2018. Argentina still owes over $40bn from the previous arrangement.
Argentine Economy Minister Martin Guzman called the move a “step forward” for the recovery of his country’s economy.
The approval comes following more than a year of negotiations between the two parties. The Argentinian Congress agreed to the financing aspect of the arrangement earlier this month, but failed to reach consensus on the policy aspects of maintaining debt at a sustainable level.
Despite the willingness of the IMF to assist the South American country’s ravaged economy, the organization is aware of the risks involved in making such a move.
“Risks to the program are exceptionally high and spillovers from the war in Ukraine are already materializing,” said IMF Managing Director Kristalina Georgieva.
“In this context, early program recalibration, including the identification and adoption of appropriate measures, as needed, will be critical to achieve the program’s objectives.”
The main aims of the arrangement are the strengthening of Argentinian public finances and tackling inflation in the country, which is rising at an alarming rate. Russia’s invasion of Ukraine has pushed commodity prices up, driving inflation rises around the world, but Argentina has particularly suffered as a result of going into the latest crisis in an already unhealthy position. Inflation levels have exceeded 50% in the country, leaving consumers struggling with soaring costs.
Under the terms of the deal, repayments will be made in an eight-year period from 2026 to 2034.