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ECONOMY | 25-07-2023 13:34

Argentina announces measures to boost foreign reserves

Peso devaluation amid IMF negotiations triggers USD rush.

The Argentine peso lost value on the informal market Monday as the government announced measures to bolster dwindling reserves while it negotiates a loan repayment plan with the International Monetary Fund.

The rate on the informal market rose to 550 pesos to the dollar from 528 pesos last week as the government said it would take steps to stimulate exports and discourage imports.

Many Argentines see converting their pesos to US currency as their only defense against the ravages of inflation, which hit its highest level in three decades in 2022, finishing the year at 94.8 percent.

The country's international reserves, over US$44 billion in January, are now at just over US$25 billion.

In the first half of this year, Argentina's trade deficit was US$4.4 billion.

The new measures included an official rate of 340 pesos to the dollar for agricultural exports until August 31 -- higher than the official rate of 284 pesos.

There are also new taxes on imports.

Sergio Massa, economy minister and a presidential hopeful in October elections, told representatives of the agricultural industry -- Argentina's main source of foreign exchange -- the measures were necessitated by "the reality of the moment."

This included ongoing negotiations with the International Monetary Fund on repayment of a US$44 billion loan, as well as the devastating economic impacts of a record-breaking drought.

On Sunday, the government and IMF said they had agreed on "the central objectives and parameters" of a repayment plan.

Buenos Aires has not been able thus far to meet the IMF requirements of accumulating international reserves and reducing its fiscal deficit.
 

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