Source: AFP
The International Monetary Fund on Wednesday approved a new $4.7 billion loan for Argentina, praising the new government of President Javier Millay as it enacts “bold” spending cuts to get the country’s troubled economy back on track.
The new disbursement — which amounts to about $40.6 billion of the amount sent to Argentina as part of a $44 billion aid program — is intended “to support the new authorities’ strong policy efforts to restore macroeconomic stability,” the statement said. the IMF said in a statement. .
IMF chief Kristalina Georgieva praised the Miley government’s “bold actions to restore macroeconomic stability and … address long-standing impediments to growth.”
Millay, a libertarian and self-described “anarcho-capitalist,” took office in December promising to cut spending and end decades of economic crisis.
Argentina faces serious economic struggles after decades of mismanagement that have driven poverty levels to 40 percent and pushed inflation to an annual rate of more than 200 percent.
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Milei, a 53-year-old outsider, won a resounding election victory on a wave of anger over crises characterized by debt, rampant money printing, inflation and the budget deficit.
But his cost-cutting measures have also sparked backlash and mass protests, with many citizens fearing it will leave them less well off.
Millay began his term by devaluing the peso by more than 50%, slashing government subsidies for fuel and transport, cutting the number of ministries in half and scrapping hundreds of rules to deregulate the economy.
“The government’s initial actions have averted a balance of payments crisis, although the path to stabilization will be difficult,” Georgieva said, a day after the IMF forecast Argentina would go into recession this year, contracting 2.8 percent.
Millay argued that addressing the economic “shock” is the only solution to the country’s problems and warned that the situation will get worse before it gets better.
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The IMF announcement came the same day Argentina’s lower house of Congress began what is expected to be a marathon debate on Milei’s mega-bill to reform the economy, politics and even some aspects of private life — touching on everything from cultural issues to criminal code to divorce.
Miley does not hold a majority in Congress, and moderate opposition lawmakers have warned they will seek further changes to the bill, particularly on the sensitive issue of granting special powers to the executive branch in the event of an economic emergency, as well as the scope and extent of privatizations.
Source: AFP