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ECONOMY | 29-08-2018 10:24

Macri asks IMF for early release of stand-by loan funds

Since taking office in late 2015, Macri has struggled to tackle inflation. His government expects it will end the year at between 27 and 32 percent.

Argentina has asked the International Monetary Fund (IMF) to bring forward disbursements of the US$50-billion stand-by credit line it secured in June, in order to help ease the country out of its economic problems, the government announced Wednesday.

The development comes amid heightened volatility in the country's financial and currency markets, which have been battered by uncertainty over inflation, an economic downturn and budget deficits.

"We have agreed with the IMF to forward all the funds necessary to guarantee compliance with next year’s financial programme," President Mauricio Macri said in a televised address also streamed online, prior to the opening of financial markets and following weeks of volatility which has included a sharp decline in the Argentine peso.

Macri sought to soothe the turbulence in a statement before markets opened, assuring Argentines that help is on the way, as the country experiences its second recession in as many years.

The economy contracted 6.7 percent in June, the third month in a row of negative growth, and the annual growth rate was a negative 0.6 percent.

"Over the past week, we have had new expressions of lack of confidence in the markets, especially over our ability to obtain financing for 2019," Macri acknowledged.

But he said the IMF would provide "all the funds necessary to guarantee the fulfillment of the financial programme next year."

The country received the first US$15 billion of the stand-by loan in June and was expected to receive a further US$3 billion in September. Part of the US$50 billion is to be allocated to support the budget, and the rest to the country's Central Bank to shore up the peso over a three-year period.

In return, the government has committed to reducing its budget deficit to 2.7 percent this year, from 3.9 percent in 2017, and to 1.3 percent of GDP next year.

ince taking office in late 2015, Macri has struggled to tackle inflation. His government expects it will end the year at between 27 and 32 percent, though most private estimates predict the final annual figure will come in at over 30 percent.

On Tuesday, the peso hit a record 31.35 dollars, accumulating a 40-percent plummet since the beginning of the year.

-TIMES/AFP

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