Buenos Aires, In an unexpected move Argentina has asked for an early release of a $50 billion loan from the International Monetary Fund amid a growing economic crisis, the IMF said.
President Mauricio Macri said on Wednesday the move was designed to restore confidence in the Argentine economy, the BBC reported.
“Over the last week we have seen new expressions of lack of confidence in the markets, specifically over our financing capacity in 2019,” Macri said in a televised address. “This decision aims to eliminate any uncertainty.”
The Argentine peso has lost more than 40 per cent of its value against the US dollar in 2018 and inflation is rampant.
The monetary body confirmed on Wednesday it was looking to strengthen the arrangement and changing its phasing, IMF Managing Director Christine Lagarde said in a statement.
Investors are concerned Argentina may not be able repay its heavy government borrowing and could default. The IMF bailout smacks of growing desperation, the BBC reported.
When the terms of the loan were agreed in May, Macri said he expected the economy to recover and did not plan to use the money.
Unlike other emerging markets — Turkey and Brazil — following devaluation of their currencies, Argentina’s situation is particularly troublesome.
It has failed to lower inflation, which is the highest amongst G20 nations, the BBC said.
Macri’s government has also failed to enact the economic reforms — curbing public spending and borrowing — that it promised the IMF.
The IMF is widely loathed in the South American nation and blamed for the country’s 2001 economic collapse after it pulled the plug and denied financial support.