BUENOS AIRES – Argentina’s President Mauricio Macri said on Wednesday that he had reached an agreement with the International Monetary Fund for the early disbursement of funds from a $50 billion credit line.
Macri said the funds from that standby deal, sealed in June, were needed ahead of schedule due to lack of confidence from international markets.
In a video distributed by the president’s office, Macri said this latest agreement was aimed at “eliminating any uncertainty that may have been generated in connection with the worsening of the international context.”
The conservative head of state added that the deal to guarantee financing for 2019 would serve to bolster confidence and allow Argentina to resume a growth path as soon as possible.
In recent weeks, external factors such as Turkey’s economic crisis and domestic concerns surrounding a corruption case involving Argentine business leaders and officials in the previous government have caused a new plunge in the Argentine peso relative to the United States dollar.
The peso has depreciated by more than 68 percent against the greenback thus far in 2018 and fell to an all-time low of around 33 pesos per dollar after the latest announcement about the early release of IMF funds.
On June 7, the IMF confirmed that the credit line with Argentina totaled $50 billion and would be disbursed over a three-year period.
Without providing specifics, Macri said Wednesday that Argentina and the IMF had reached a deal “to advance all the necessary funds to guarantee compliance with the financial program next year.”
Argentina obtained the credit line amid concerns about a selloff of the peso in May and the ability of the country to pay its dollar-denominated debt.
Argentina received the first disbursement of $15 billion in June to bolster the country’s foreign reserves.
The country’s problems have been aggravated by a difficult international context, particularly higher interest rates in the US and accompanying capital flight from Argentina and other emerging markets.
Agustin Rossi, head of a key left-wing opposition bloc in Argentina’s lower house, said the early release of IMF funds was not the answer.
“It expands the external deficit and is insufficient to fund the trade deficit and (counter) capital flight,” Rossi said in a statement.
He added that Macri’s discourse about a lack of market confidence was a “pretext to keep going to the IMF, deepening austerity and encroaching on the rule of law.”
The lawmaker said the country was suffering the consequences of a wrong-headed course that had “wiped out popular consumption (and) brought the domestic market to a halt.”
“There’s a recession and we’re not generating real foreign reserves through value-added exports,” Rossi said.
Argentina’s economy contracted 6.7 percent in June relative to the same month of 2017.