IDB increases financing to Argentina as foreign reserves dwindle
2022.09.08 08:18
Customers line up to buy produce in a market as inflation in Argentina hits its highest level in years, causing food prices to spiral, in Buenos Aires, Argentina April 12, 2022. REUTERS/Mariana Nedelcu
BUENOS AIRES (Reuters) -Argentina and the Inter-American Development Bank (IDB) agreed on Tuesday to expand financing to the country by $400 million this year, with further talks that could bring total financing to more than $4 billion in 2022 and 2023.
The agreement comes as Argentina seeks to leave behind financial turmoil that has raised the inflation rate to over 90% this year, pushing consumption and economic activity down and moving over 40% of the population into poverty.
After a meeting between Argentine and bank officials, IDB President Mauricio Claver-Carone told reporters that the bank and the country have drawn up a plan to unlock “what was stuck,” alluding to recent doubts about financing Argentina.
In a statement on Tuesday evening, the IDB said it was increasing two previously announced loans by $200 million each in the coming months, with one of them, now totaling $700 million, to be disbursed this month.
“Together, these loans would enable the IDB to increase support for Argentina from $800 million to $1.2 billion in the final quarter of 2022,” the bank said.
A government source told Reuters that the agreement follows negotiations in Washington between representatives from Argentina’s economy ministry and the IDB, adding that the country urgently needs foreign currency to avoid a depreciation of the peso in the midst of high inflation.
In addition to the $1.2 billion, the IDB said its “financing potential for the rest of 2022 could include additional programs totaling $725 million.”
If approved, those loans would bring the bank’s total 2022 financing to Argentina to $2.37 billion, the IDB said.
Another $1.8 billion in loan programs is in advanced discussions for dispersal in 2023.
“This measure … allows us to show the strength that we want our central bank to have in reserves,” Argentine Economy Minister Sergio Massa said after the meeting with IDB officials.
