IMF increases Argentina bailout package to $57 billion
Source: CNBC
The International Monetary Fund and Argentina announced Wednesday an arrangement to increase resources available to the South American country by $19 billion.
The agreement, pending IMF Executive Board approval, would bring the total amount available under the program to $57.1 billion by the end of 2021, up from the $50 billion secured on June 8.
Argentina's recession-laden economy is struggling under steep interest rates of 60% and a currency that has lost around 50% of its value against the dollar this year.
The governor of Argentina's Central Bank, Luis Caputo, resigned on Tuesday after taking the reins in June, the bank said in a statement - a surprise announcement for a country in the midst of talks with the IMF. The announcement sent the peso tumbling.
Read more: https://www.cnbc.com/2018/09/26/imf-increases-argentina-bailout-package.html
Argentina's Macri and the IMF's Christine Lagarde at an Atlantic Council (NATO) dinner in New York Monday night.
Macri has already spent nearly all the $15 billion drawn from the credit line on June 22 to prop up the peso, which has nevertheless lost half its value since Argentina's carry-trade debt bubble imploded in April.
"I must confess I have a crush on Christine," Macri told attendees. "And soon all Argentines will be crushing on her too."
Midnight Writer
(21,745 posts)sandensea
(21,624 posts)Encourage right-governments to push their own countries into near-insolvency by adopting Bush-style trade/inancial deregulation (not that Macri needed any encouragement);
external deficit and debt levels skyrocket;
show up at the moment panic sets in to "save the day" (w/ plenty of photo-ops like the one above);
offer a gigantic stand-by credit line - conditioned on draconian budget cuts and even more financial deregulation;
lend to the country from the credit line just long enough to assure big business can ferret all their money out (the loans essentially pay for capital flight, guaranteeing that pesos can be readily sold for dollars to be sent overseas);
and just when most people think the crisis is over, pull the rug out by shutting off access to the credit line.
A major panic then sets in, the peso and the economy collapse, and everything is soon available at fire-sale prices - particularly state-owned firms (which the IMF hates, because they can't control).
Plus, they would then owe so much to the IMF - besides the bondholders and other obligations - it could never be paid off.
Thanks for reading and commenting, Midnight Writer. What a world, right?