The International Monetary Fund (IMF) agreed to the loan in June 2018 but will now bring the loan forward after an emergency request from Argentinian President Mauricio Macri.
The Argentine Peso has lost 40% of its value against the US dollar this year amid spiralling inflation but it is hoped the expedited loan will allow the country to strengthen its central bank.
The International Monetary Fund (IMF) released a statement through Managing Director Christine Lagarde saying she had met with President Macri on 29 August.
“In consideration of the more adverse international market conditions, which had not been fully anticipated in the original program with Argentina, the authorities will be working to revise the government’s economic plan with a focus on better insulating Argentina from the recent shifts in global financial markets, including through stronger monetary and fiscal policies and a deepening of efforts to support the most vulnerable in society,” the statement continued.
Argentina asks IMF to release $50bn loan as crisis worsens https://t.co/lwUGUe84ck
— BBC News (World) (@BBCWorld) August 29, 2018
Before securing the early release of the loan, investors feared the country may be forced to default on its massive loans.
Back in May, Macri said he anticipated the economy would recover and Argentina would not need an injection of capital from the IMF. Since then, inflation has continued to worsen and is forecast to surpass 30% by the end of 2018. The value of the peso has also fallen by more than 40% this calendar year.
Argentina’s economy shrunk by 6.7% in June, the third successive month of negative growth. The opposition party has blamed the centre-right Macri’s policies of cutting social spending for the worsening economy.
Argentina burns reserves, asks for early IMF help as peso crashes https://t.co/sIX6GuLdEA See the country's economy in five charts https://t.co/nj8VdplMGC via @ReutersGraphics pic.twitter.com/jTGbrcUJIY
— Reuters Top News (@Reuters) August 29, 2018
A previous intervention into Argentina’s economy from the IMF ended in failure and the country’s worst economic crisis, in 2001. During that period, millions lived below the poverty line and unemployment hit 20%.
A subsequent report by the IMF’s internal audit unit found that the IMF had failed to provide sufficient oversight and had overestimated growth while lending Argentina money to service unsustainable levels of debt.
Argentina is not the only South American country suffering an economic downturn; Venezuela has been plunged into a chaotic state recently, prompting Brazil to send troops to its Northern border.