IMF approves release of $11 billion loan for Argentina - part of a record $56 billion bailout

[sandensea]

The International Monetary Fund (IMF) today approved the release to Argentina of a $10.87 billion tranche from a credit line agreed to last year with the Mauricio Macri administration.

The disbursement, part of a $56.3 billion standby financing deal to help Argentina recover from a debt crisis that has rocked the South American nation over the last year, is subject to approval by the IMF executive board.

The latest tranche brings the total drawn from the credit line since June 22 to $39 billion. All but $5.9 billion of the remainder is scheduled to be disbursed by this October - when the deeply unpopular Macri faces voters in his bid for re-election.

The bailout, agreed to on June 8, gave the IMF far-reaching control over Argentina's monetary and budgetary policy - something opponents see as unconstitutional.

With today's announcement, the IMF also gave its approval to Macri's use of up to $9.6 billion of the loan to shore up the peso - which lost half its value between April and August but has since stabilized at around 40 to the U.S. dollar.

The peso lost 1.4% on today's news, to 41.59.

From bubble to bailout

The current crisis began last April, when a $60 billion carry-trade debt bubble known in Argentina as the "financial bicycle" ultimately collapsed.

The crisis cut off Argentina's access to foreign credit markets, forcing Macri to turn to the IMF and to raise the central bank discount rate from 27% a year ago, to 64% currently.

This rate hike has in turn exacerbated the country's recession - the second since Macri took office in late 2015: GDP fell 7% as of December, with fixed investment falling 19.2% and 191,000 registered job losses.

Inflation has meanwhile risen to 51.3% - the highest in 27 years.

Default worries

The short-term profile of much of this debt has led to concerns of a future bondholder default similar to that of 2001.

A report from the UMET External Debt Observatory noted that between 2020 and 2023, bondholder repayments alone (mainly domestic) will average $34 billion annually - plus $12 billion annually for five years until 2025 for the IMF.

At: http://www.batimes.com.ar/news/economy/imf-staff-approves-release-of-us1087-billion-tranche-of-loan.phtml

IMF South America division head Roberto Cardarelli and IMF Argentina division head Trevor Alleyne during their review mission in February.

Cardarelli reportedly admitted in private that the bailout was "unsustainable" and that his "sole mission was to help guarantee Macri's re-election, at Washington's request."

[Judi Lynn]

1. The last line is a killer, sandensea. What a nightmare. "Guarantee Macri's re-election?"

Argentina can't afford it.

Both Cardarelli and Alleyne look as if they are just barely able to suppress uproarious laughter. Simply amazing.

So this means Macri's orange friend has put in a word with him with the IMF to get them to devastate Argentina for so many years into the future.







Astounding.

Is this an election year, sandensea, or is it next year for Macri?

Thank you so much for the staggering information.

[sandensea]

2. Well said, Judi. It's all basically a campaign contribution for Macri for the elections this year.

But, of course, on Argentina's dime: to be repaid at $12 billion a year for five years. One more thing for the next president to worry about, sadly.

You know, Argentina has never defaulted on an IMF loan (28 countries have) - but they may soon have to, if this keeps up.

To be fair, the problem isn't so much Cheeto as it is the Miami extremists that have long since taken over the State Dept.'s Western Hemisphere office.

They have lunch with a couple of Argentine fascists - who in private have nothing but racist contempt for Cuba, I can assure you - and that's all it takes.

From then on, it's: Macri = friend; anyone else = 'communist!' (especially if named Kirchner). Like Pavlov's pigeons.

The best part is that, like the GOP-backed dictatorship 40 years ago, hardly anyone has been worse for Argentine business than Macri. The bankruptcies, closures, losses, and layoffs are now endemic - and mounting every day.

Thanks as always for keeping up with so much, Judi. Happy Equinox tomorrow!