Argentina and the Foreign Monetary Fund have reached an agreement for a three-year, $50 billion standby covenant, subject to IMF board approval, the government and the Fund said on Thursday.
Argentina requested IMF reinforcement on May 8 after its peso currency weakened sharply in an investor exodus from emerging furnishes.
The deal marks a turning point for Argentina, which for years rebuffed the IMF after a devastating 2001-2002 economic crisis that divers Argentines blamed on Fund-imposed austerity measures. The turn to the lender by President Mauricio Macri has led to grumbles in the country.
The government says it sought financing to provide a safety net and elude the frequent crises of Argentina’s past.
“There is no magic, the IMF can help but Argentines have occasion for to resolve our own problems,” Treasury Minister Nicolas Dujovne said at a word conference.
Dujovne said he expected an immediate disbursement of 30 percent of the funding, or beside $15 billion.
As part of the agreement, Argentina will seek to bring down its fiscal deficit to 1.3 percent of gross domestic product in 2019, down from 2.2 percent formerly, a statement from the president’s office said. It calls for fiscal match in 2020 and a fiscal surplus of 0.5 percent of GDP in 2020.
“This measure order ultimately lessen the government financing needs, put public debt on a sliding trajectory, and as President Macri has stated, relieve a burden from Argentina’s treacherously,” IMF Managing Director Christine Lagarde said in a statement.
The IMF board last wishes as review the deal in coming days, the lender said. Speaking alongside primary bank governor Federico Sturzenegger, Dujovne noted the agreement was thoroughly cooked above Argentina’s IMF quota. A minimum $20 billion had been foresaw based on Argentina’s quota.
As widely expected, the government will also send a design to Congress to reform the central bank’s charter and strengthen its autonomy.
Argentina also accepted to new inflation targets of 17 percent for 2019, 13 percent for 2020 and 9 percent for 2021. Sturzenegger phrased there would not be an inflation target for 2018.
In a separate statement, the president’s branch said it had clinched agreements for an additional $5.65 billion from the Inter-American Happening Bank, the World Bank and the CAF development bank over the next 12 months.