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IMF approves extra $8 billion for Argentina
The International Monetary Fund on Friday approved an $8 billion increase in its existing loan program with Argentina, bringing it to a total of nearly $22 billion.
The International Monetary Fund on Friday approved an $8 billion increase in its existing loan program with Argentina, bringing it to a total of nearly $22 billion.
The IMF also said actions planned by the Argentine government to eliminate its federal deficit, "if firmly implemented, are expected to result in a lasting decline in the risk premium on Argentine debt and of domestic interest rates." That would create "conditions for a modest recovery of real GDP growth in the final quarter of 2001, which would pave the way for growth of about 2.5 percent in 2002," the IMF said.
The fund estimated that Argentina's real per capita GDP would shrink 2.6 percent in 2001, following a decline of 1.7 percent in 2000 and a drop of 4.6 percent in 1999.
Anne Krueger, IMF first deputy managing director and acting chair of the IMF board, praised the Argentine government for the steps it has taken to strengthen its program for dealing with its severe financial crisis.
Following 12 days of tense negotiations last month between Argentine officials and international financial officials, IMF Managing Director Horst Koehler proposed the fund's board consider a cash injection for the cash-strapped country.
Argentina sought the funds to boost market confidence and help it climb out of an economic slump.
The board's approval of the cash injection, which was expected, was taken along with the completion of the fourth review of the country's loan program and makes available $6.3 billion immediately, including $5.05 billion from the newly approved $8 billion, the IMF said.
The IMF said that an additional drawing of $1.24 billion will be available to Argentina this year upon completion of a fifth program review.
Argentina is set to receive $6.93 billion next year under the program and $973 million in 2003. However, the exact schedule for those disbursements has not yet been worked out.
Bureau Report
The IMF also said actions planned by the Argentine government to eliminate its federal deficit, "if firmly implemented, are expected to result in a lasting decline in the risk premium on Argentine debt and of domestic interest rates." That would create "conditions for a modest recovery of real GDP growth in the final quarter of 2001, which would pave the way for growth of about 2.5 percent in 2002," the IMF said.
The fund estimated that Argentina's real per capita GDP would shrink 2.6 percent in 2001, following a decline of 1.7 percent in 2000 and a drop of 4.6 percent in 1999.
Anne Krueger, IMF first deputy managing director and acting chair of the IMF board, praised the Argentine government for the steps it has taken to strengthen its program for dealing with its severe financial crisis.
Following 12 days of tense negotiations last month between Argentine officials and international financial officials, IMF Managing Director Horst Koehler proposed the fund's board consider a cash injection for the cash-strapped country.
Argentina sought the funds to boost market confidence and help it climb out of an economic slump.
The board's approval of the cash injection, which was expected, was taken along with the completion of the fourth review of the country's loan program and makes available $6.3 billion immediately, including $5.05 billion from the newly approved $8 billion, the IMF said.
The IMF said that an additional drawing of $1.24 billion will be available to Argentina this year upon completion of a fifth program review.
Argentina is set to receive $6.93 billion next year under the program and $973 million in 2003. However, the exact schedule for those disbursements has not yet been worked out.
Bureau Report