Argentina has been forced to seek a financial package help from the International Monetary Fund (IMF) after the country failed to stall the falling of its currency and the rising rates of interest all throughout last week. there is apprehension that these issues could destabilize the already ailing economy of the country.
A formal request for an “exceptional access standby arrangement” that would help the country to pay its foreign debts, the IMF said, while the government iws trying to stop a 2001 like collapse to its economy.
The request of the Argentina government for the facility which is expected to be in the region of $30 billion had been conveyed to the IMF board by the IMF managing director, Christine Lagarde, she said.
A message from the IMF that was described to be a signal that the Fund was supportive of Argentina’s cause states that the board of the IMF would lend its support to the Argentina and would help it to build and maintain social cohesion while the government followed up on its economic aims and address the issues that has created “significant financial volatility”.
According to analysts, as one of the main causes of the recent troubles of Argentina is a severe drought that has r5esulted in wide spread damage to its agricultural sector which is an important component of the economy of the country. the country is dependent on sale of its agricultural products for generation of foreign currency and the U.S. and China are the major importers of its agri-products.
The local currency of the country has been devalued by 16% this month and has hit multiple lows and the central bank of the country halted dollar selling to shore up the currency on Thursday.
President Mauricio Macri vowing to fasten the deficit cutting efforts of his government which was like an olive branch to the international money markets as he declared that the run on the peso was over. However, he was forced to retract as he announced on national television hat the his government would seek IMF help.
It was just a few years ago that Argentina was considered to have a strong and secure economy, enough to sell a heavily oversubscribed 100-year bond to international investors and therefore the latest development is a humiliating U-turn for it.
While Macri has bene successful in implementing a number of reforms, he has not been successful in bringing in money kept in foreign countries by wealthy Argentinians and some of the large domestic companies. The economy of the country had severely suffered in 2001 because of alleged economic policies backed by the IMF and Macri is trying to prevent its repeat.