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Argentine President Says “There’s No Chance Argentina Will Default” With Increased IMF Credit

Mauricio Macri, President of Argentina, stated that a revamped arrangement with the International Monetary Fund (IMF) will help boost investor confidence in the country after a financial crisis forced South America’s second-largest market to a recession.

“We are working with the IMF and we are going to present something that will bring confidence,” Macri said. “More confidence than what we’ve had in the last 10 days when markets have turned around and things are moving better.”

“It’s a very clear monetary policy that will show where we are going, that will show that we are really going to drop dramatically down the inflation and our needs for financial external support,”
he added.

Macri did not specify details but added that a brand-new deal will come “in a couple of days.” He promised that Argentina will pay its debts with the support of the Fund. Many investors worry it may not be so simple, referencing how the government defaulted in 2001 with a smaller IMF loan.

An IMF spokesman said the proposal presented by Macri’s government was a pivotal factor in the improvements needed for a different loan package but explained that there is still no timeframe for settling the support.

Argentine leaders are arranging a raise in the $50 billion credit line with the IMF, said a government official. An increment of $3 billion to $5 billion is more plausible than the extra $20 billion reported by local news outlets, according to the official. The amount is still under discussion, added the official who requested anonymity.

Argentina is trying to ease investors’ minds who feared the nation may not get sufficient funds to repay its debts in 2019 by speeding up loan disbursements. Argentina will cut government spending next year while Macri seeks re-elections, as part of the IMF agreement. The government agreed to decrease its primary fiscal debt from 2.6 percent of gross domestic goods this year to zero in 2019.

Macri stated the renegotiated IMF deal would incorporate a more detailed fiscal policy structure to give clarity on the central bank’s policies but said foreign exchange limitations like those implemented in the past, are not under review.

“What it will involve is a clear monetary policy that will show where we are going – that’s the most important part of the agreement,” he said.

While the introduced austerity funds have been welcomed by the IMF, it has led to protests in streets of Argentina.