Inter-American Development Bank announces US$3.8 billion in aid for Argentina

The Inter-American Development Bank (IDB, BID) will grant Argentina over US$3.8 billion in funding this year, the bank's chief said in an interview on Sunday, praising the reforms undertaken by President Javier Milei.

In an opinion piece in the Financial Times newspaper, IDB President Ilan Goldfajn praised Milei's "remarkable progress in restoring much-needed fiscal balance by turning a primary deficit of 2.9 percent of GDP at the end of 2023 into a surplus of 1.5 percent of GDP at the end of August this year"

In the first quarter of this year, Argentina produced its first quarterly budget surplus in 16 years.

"It hasn't been straightforward," Goldfajn said, referring to the draconian austerity measures and deep spending cuts launched by Milei, which have been blamed for driving up poverty levels.

Goldfajn, a former governor of Brazil’s Central Bank, urged the Milei government to "continue improving spending efficiency and redirecting resources to better support the most vulnerable Argentines."

Poverty now affects more than half of the population in Argentina.

Public spending, Goldfajn said, "must become more efficient and equitable."

"The ultimate goal is to create job opportunities and achieve lasting inclusive growth," he added.

Goldfajn revealed that the IDB, which provides development assistance to Latin American and Caribbean countries, would provide over US$2.4 billion in public sector loans to Argentina in 2024 and that the bank's private sector arm would finance more than 20 private sector projects to the tune of US$1.4 billion.

"An efficient public sector, simplified regulations, strong social protection and a private sector that steps in and steps up can create a virtuous circle of stability and sustained inclusive growth. The past does not have to be a prologue for Argentina," concluded the IDB president.

While campaigning for the presidency last year, Milei wielded a chainsaw to signify his plans to slash spending and tame one of the world's highest inflation rates.

His shock therapy approach has led to a marked decline in inflation, which fell to 3.5 percent in September, its lowest level since November 2021, but has also driven the economy into recession.

– TIMES/AFP