The World Bank announced Thursday that it had approved the disbursement of an additional US$500-million loan to Argentina.
The institution said the funds would provide budgetary support for social programmes dedicated to helping those in poverty. The latest installment is the second part of a total US$1 billion loan first agreed in November 2018.
Jesko Hentschel, the World Bank’s director for Argentina, Paraguay and Uruguay, said the funds would help to protect the most vulnerable households, with the economy still gripped by recession.
“To protect the most vulnerable households, this project supports mitigating inflation impacts by maintaining the purchasing power of social programs such as the Universal Child Allowance Program (AUH) and by continuing to support efforts to provide equitable coverage of health services in the provinces,” he said.
Argentina, home to Latin America’s third-largest economy, officially entered recession in 2018, after a currency crisis saw the peso crash in value against the dollar. Inflation has soared in the subsequent months, with prices having risen by more than 19 percent this year (until May). Unemployment currently stands at 10.1 percent, while poverty has risen to 32 percent.
The new loan is repayable over a total of 32 years and comes with a variable spread and a grace period of seven years.
"The project accompanies the implementation of public policies to promote inclusive growth and contribute to protecting the most vulnerable population, with two core objectives: consolidate the bases for private sector-led growth and strengthen social safety networks and the equity of fiscal policy," the World Bank said in a press release.
"To contribute to improve business climate, the financing supports measures to enhance competitiveness, reduce trade barriers, facilitate the registration of new firms, promote the development of capital markets and encourage private investment in renewable energy," it added.
Last year, the Mauricio Macri administration also agreed a US$56-billion loan package with the International Monetary Fund.