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IMF says will move quickly on Argentina loan; no details yet

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The seal of the International Monetary Fund is seen at the headquarters building in Washington, DC on July 5, 2015. The euro was dropping against the dollar after early results of the Greece bailout referendum suggested the country rejected fresh austerity demands from EU-IMF creditors. AFP PHOTO/MANDEL NGAN / AFP PHOTO / MANDEL NGAN

Washington — The International Monetary Fund will move quickly to agree on a loan program to support Argentina but there are no details yet on what it will entail, a fund spokesman said Thursday.

However, the official stressed that the current situation — marked by “renewed financial market volatility” that has hit the country’s currency — is very different than the last time Argentina went to the IMF for aid.

Officials don’t have a date for concluding the talks but the IMF “can move quickly…and we intend to move quickly,” spokesman Gerry Rice told reporters at a briefing.

However, the size, exact type and terms of the financial package will be “part of discussions” with Argentine authorities that began last week and details will be developed.

The IMF board will hold an informal meeting on Argentina on Friday to get an update from staff but the final loan will not be approved until negotiations have been completed, he said.

The country is seeking a “high access” standby arrangement, which according to press reports could amount to $30 billion. SBAs can last up to three years and usually grant periodic disbursements as the country meets previously agreed economic targets.

‘Vastly different’
Argentine President Mauricio Macri’s decision to seek help from the Washington-based lender was a risky move given the bitter relations during the last crisis 17 years ago and the popular view that the IMF imposed tough conditions that worsened the economic pain.

But Rice stressed that conditions have changed.

“Our ultimate goal is to help support the authorities in their efforts to strengthen the Argentine economy and to protect the living standards of the Argentine people, and particularly for the most vulnerable groups,” he said.

But the situation is “vastly different” than the previous crisis and policies and institutions have been “strengthened considerably.”

A crisis of confidence in the Argentine peso has seen it plunge nearly 20 percent over the past six weeks and forced Argentina to seek a financial lifeline from the IMF. On Monday, it dipped to a historic low of 25.51 against the dollar.

But Macri on Wednesday said the currency crisis had passed.

“The central problem is the fiscal deficit,” Macri added. “We have to reduce it. We cannot spend more than we have and depend on international loans to finance it.”

Rice said the IMF “strongly welcomed” Macri’s comments, including the recognition of the challenges his administration faces and “the government’s ownership of the policies needed to address those challenges.”

The budget deficit has narrowed to the equivalent of 3.9 percent of GDP under Macri, a businessman who came to power in 2015.

Argentina’s economy, Latin America’s third largest, grew 2.8 percent in 2017 — growth it hopes to continue this year.

However, the government has not managed to limit persistently high inflation, which has exceeded 20 percent for more than a decade — though this is a key aim of Macri’s center-right government. — AFP