Argentina has received the largest loan program from the International Monetary Fund, aimed at consolidating the country’s struggling finances: a whopping $ 57.1 billion that will be disbursed over the next three years.
“This is the largest loan in the history of the IMF,” said the director of the fund, Christine Lagarde, on Wednesday, as the final loan agreement was announced in New York.
The loan – of which $ 15 billion has already been received by Argentina – comes with strict conditions, including a commitment to a zero deficit for 2019.
Argentina initially had secured $ 50 billion in a deal reached in June after the South American country was hit by a currency crisis, a peso rush and double-digit inflation.
Economy Minister Nicolás Dujovne said that at the last minute the IMF agreed to increase the loan program by $ 7.1 billion.
Lagarde said that as part of the deal, Argentina’s central bank had agreed to intervene in foreign exchange markets only in extreme circumstances and that the new amount would help the Argentine government face its challenges.
The deal will only allow Argentina’s central bank to intervene to stabilize its currency if the peso depreciates below 44 pesos to the dollar. It is currently at 39 pesos to the dollar after losing 50% of its value since the start of the year.
The deal was announced just a day after the unexpected resignation of Argentina’s central bank president Nicolás Caputo, apparently after disagreements with the IMF directive limiting the bank’s future intervention to save the peso.
Thousands of Argentines joined a nationwide strike on Tuesday to protest economic turmoil and Mauricio Macri’s austerity measures.
Most Argentines blame the international lending institution for promoting policies that led to the country’s worst economic crisis in 2001, which plunged millions into poverty.
The IMF admitted to making a series of mistakes that contributed to the economic implosion.
A 2004 report by the IMF’s internal audit unit concluded that it had not sufficiently monitored and overestimated growth and the success of economic reforms, as it continued to lend money to the Argentina when the burden of its debt had become unsustainable.