The agreement will authorize a “stand-by” credit line over 36 months of up to $50 billion to Buenos Aires, but in exchange the South American nation must reduce its deficit and inflation rate
BUENOS AIRES – Argentina announced on Thursday that it will receive credit lines totaling $5.65 billion from the Inter-American Development Bank, the World Bank and the CAF-Latin American Development Bank, in addition to a $50 billion credit line from the International Monetary Fund.
“These resources double the regular annual disbursement by these entities in Argentina, accompany the agreement with the International Monetary Fund and broaden the availability of financing,” said the Argentine government in a statement.
The IDB, WB and CAF credit lines are for “rapid disbursement” and will be tapped within the next 12 months.
Of the total $5.65 billion available through those institutions, $2.5 billion is being extended by the IDB, $1.75 billion by the WB and $1.4 billion by the CAF-Development Bank.
The Argentine government and the IMF reached on Thursday – after three weeks of arduous negotiations – an agreement that will authorize a “stand-by” credit line over 36 months of up to $50 billion to Buenos Aires, but in exchange the South American nation must reduce its deficit and inflation rate.
The credit line is designed to help restore investor confidence while the Argentine government battles double-digit inflation and an increasing state budget deficit.
The government of Mauricio Macri said in a statement that it will take cash in the first tranche of the credit line, after which it will treat the loan as precautionary.
IMF Director Christine Lagarde emphasized the need to accelerate the pace as which Argentina reduces its federal deficit.