Published: Sun, June 10, 2018
Business | By Tara Barton

International Monetary Fund says Argentina's targeted adjustments need commitment

International Monetary Fund says Argentina's targeted adjustments need commitment

Many blame the International Monetary Fund for austerity measures imposed on the country after the devastating economic crisis in 2001-2002.

The first "immediate" disbursement will be 15 billion US dollars, or 30 percent of the total amount, he said. It calls for fiscal balance in 2020 and a fiscal surplus of 0.5 percent of GDP in 2020.

"This is a plan owned and designed by the Argentinian government, one aimed at strengthening the economy for the benefit of all Argentines", IMF MD Christine Lagarde says in the statement.

Argentina is not alone among emerging markets facing a currency crisis.

"In the short-term we expect a rally in Argentinean assets", Ezequiel Zambaglione, head of research at Buenos Aires brokerage Max Valores, wrote in a Friday note to clients.

The South American country will be expected to pay back the loan, at an of 1.96-4.96 per cent, in eight quarterly instalments, with a granted three years of grace.

In this photo released by Argentine Presidential press office, Argentina's President Mauricio Macri holds up his glass for a toast with journalists to celebrate Journalist Day at the government house in Buenos Aires, Argentina, Thursday, June 7, 2018.

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Princess Charlotte on the other hand was blissfully unaware and too busy clapping along at her third parade to notice. The Queen then inspects the troops before heading back to Buckingham Palace where she's joined by the Royal Family .

"We are also encouraged by the authorities' commitment to ensure legal independence and operational autonomy for the central bank and to immediately put an end to central bank financing of the federal deficit", Lagarde added. The central bank will also stop transferring money to the treasury, a practice known locally as the "little machine" that is seen as a major driver of incessant inflation.

The credit line is created to help restore investor confidence while the Argentine government battles double-digit inflation and an increasing state budget deficit.

"It is convincing and greatly exceeds expectations".

"The agreement shows there is lot of global support to make Macri's Argentina work, and it should ease financing and political concerns this year", Culverhouse said.

But the short-term economic picture for Argentina remains more complicated than it appeared several months ago. The previous targets were 2.2% and 3.2%, respectively.

The country will need to lower inflation rate to 17 percent by 2019, 13 percent by 2020, and 9 percent by 2021, said Argentina's Financial Minister Nicolas Dujovne.

"They are mortgaging the future for our children and grandchildren", Martin Sabbatella, a politician aligned with former populist President Cristina Fernandez, wrote on Twitter.

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