© Reuters. Customers line up to buy produce in a market as inflation in Argentina hits its highest level in years, causing food prices to spiral, in Buenos Aires, Argentina April 12, 2022. REUTERS/Mariana Nedelcu
BUENOS AIRES (Reuters) – Argentina and the Inter-American Development Bank (IDB) agreed on Tuesday to expand financing to the South American country to almost $5 billion between 2022 and 2023.
The agreement comes as Argentina seeks to leave behind financial turmoil that has raised inflation to over 90% this year, pushing consumption and economic activity down and over 40% of the population into poverty.
After a meeting between Argentine and bank officials, IDB President Mauricio Claver-Carone told reporters that the bank and the country have drawn up a plan to unlock “what was stuck,” alluding to recent doubts about financing Argentina.
Sources with knowledge on the matter told Reuters that more than $3 billion of the agreed total would be sent to Argentina this year.
The idea came after negotiations were held in Washington between representatives from Argentina’s economy ministry and the IDB, a government source said, adding that the country urgently needs foreign currency to avoid a depreciation of the peso in the midst of high inflation.
Of those $3 billion, $1.2 billion would be freely available and would be disbursed in two steps: $500 million before Sept. 30 and $700 million before Dec. 30, according to the Argentine government source.
In 2023, the agency will disburse another $1.8 billion.
“This measure … allows us to show the strength that we want our central bank to have in reserves,” Argentine Economy Minister Sergio Massa said after the meeting with IDB officials.
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