IDB increases financing to Argentina as foreign exchange reserves dwindle, Reuters reports

IDB increases financing to Argentina as foreign exchange reserves dwindle, Reuters reports

© Reuters. Shoppers line up to buy produce at a market as inflation in Argentina hits its highest level in years, causing food prices to spiral, in Buenos Aires, Argentina, April 12, 2022. REUTERS/Mariana Nedelcu

BUENOS AIRES (Reuters) – Argentina and the Inter-American Development Bank (IDB) agreed on Tuesday to expand financing to the country by $400 million this year, with further talks that could raise the total to more than $4 billion in 2022 and 2023. years.

The agreement comes as Argentina seeks to leave behind financial turmoil that has pushed inflation to over 90% this year, depressed consumption and economic activity and pushed more than 40% of the population into poverty.

After a meeting between Argentine and bank officials, IDB President Mauricio Claver-Carone told reporters that the bank and the country had drawn up a plan to unlock “what’s stuck,” alluding to recent doubts over Argentina’s financing.

In a statement late Tuesday, the IDB said it was increasing two previously announced loans by $200 million each in the coming months, with one of them, now $700 million, disbursing this month.

“Together, these loans would allow the IDB to increase its support to Argentina from $800 million to $1.2 billion in the last quarter of 2022,” the bank said.

A government source told Reuters the agreement followed talks in Washington between representatives of Argentina’s economy ministry and the IDB, adding that the country urgently needed foreign currency to avoid peso depreciation amid high inflation.

In addition to the $1.2 billion, the IDB said its “financing potential for the remainder of 2022 could include additional programs totaling $725 million.”

If approved, the loans would bring the bank’s total financing to Argentina in 2022 to $2.37 billion, the IDB said.

Another $1.8 billion in credit programs is in advanced talks for dispersal in 2023.

“This measure … allows us to show the strength we want our central bank to have in reserves,” Argentina’s Economy Minister Sergio Massa said after a meeting with IDB officials.

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