Argentina is planning on initiating talks about securing financial aid from the International Monetary Fund (IMF). The move follows 17 years after Argentina defaulted on debts and 12 years after they cut their ties with the IMF.
After recent news that interest rates rose to 40 percent, President Mauricio Macri said that the IMF aid would increase growth and help avoid past crises. President Macri said he spoke with IMF director Christine Lagarde and that Lagarde confirmed they would start working on the agreement.
The country was reportedly seeking $300 billion, but the government did not issue any statement regarding the matter. The peso’s value decreased last year in the middle of the president’s pro-market reforms. Last week, Argentina’s central bank increased their interest rates from 33.25 percent to 40 percent.
People still blame the IMF’s austerity requirements for regulations that led to a financial and economic meltdown in 2001 until 2002 which left millions of middle-class citizens in poverty. Argentina failed to pay their debts to the IMF, their last paid loan in 2006, and eventually severed their ties with them.
President Macri said the country was suffering because of increased oil prices and expectations for the US to raise interest rates in the following months. Lagarde has described the nation as a “valued member of the IMF.” She said that discussions have started regarding how the IMF and Argentina can work together to strengthen the Argentine economy. She added that these would proceed in short order.
The country is in the midst of a pro-market reform as the government aims to reverse years of protectionism and high government spending under former president Cristina Fernandez de Kirchner.
Inflation is a pressing problem in the country. In 2017, it recorded a 25 percent inflation rate, ranking behind Venezuela.
Mr. Macri assured that the new negotiations with the IMF would give the country more substantial support to face a new global scenario and avoid the crises they previously had. Industries gave positive reactions to the news with both local shares and the peso receiving ground.