The Inter-American Development Bank has announced the approval of a US$700-million loan for Argentina to strengthen the nation’s public finances and "protect social spending."
The credit-line will “provide budget support for Argentina to cover its short-term financing needs and protect social spending on vulnerable groups and infrastructure, while implementing reforms to reduce the public deficit, promote price stability and ensure debt sustainability," the IDB (BID in its Spanish acronym) said in a statement.
The financing "is aligned" with the objectives outlined in the US$44.5-billion debt restructuring deal signed between Argentina and the International Monetary Fund (IMF) back in March, it added.
In September, during a visit by Economy Minister Sergio Massa to Washington, the IDB announced that it would grant loans totalling almost US$5 billion to Argentina this year and next. Wednesday's announcement coincided with Massa's arrival in the US capital for the IMF's annual meetings.
Last week, the IMF announced the approval of the second review of its multi-billion-dollar agreement with Argentina, leading to the immediate disbursal of some UD$3.8 billion. Nevertheless, the Fund’s Managing Director Kristalina Georgieva warned that the country’s economic situation remains "fragile."
Argentina currently has one of the highest inflation rates in the world. Prices have risen 56.4 percent since January with private economists now forecasting an annual rate that surpasses 90 percent. Around 36.5 percent of the population lives in poverty, according to the INDEC national statistics bureau.
The loan has an amortisation period of seven years, a grace period of three years and a special interest rate, the IDB added.