Argentina and IDB agree $5bn deal as foreign exchange reserves dwindle

Customers line up to buy goods at a market as inflation in Argentina hits its highest level in years, causing food prices to soar, in Buenos Aires, Argentina April 12, 2022. REUTERS/Mariana Nedelcu

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BUENOS AIRES, Sept 6 (Reuters) – Argentina and the Inter-American Development Bank (IADB.UL) (IDB) agreed on Tuesday to extend financing to the South American country to nearly $5 billion between 2022 and 2023 .

The deal comes as Argentina seeks to emerge from the financial turmoil that has driven inflation to over 90% this year, pushing down consumption and economic activity and plunging over 40% of the population in poverty.

After a meeting between Argentinian and bank officials, IDB President Mauricio Claver-Carone told reporters that the bank and the country had drawn up a plan to unblock “what was blocked”, alluding to recent doubts over funding from Argentina.

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Sources with knowledge of the matter told Reuters more than $3 billion of the agreed total would be sent to Argentina this year.

The idea came after negotiations in Washington between representatives of Argentina’s economy ministry and the IDB, a government source said, adding that the country urgently needed foreign currency to avoid a depreciation of the peso in full swing. inflation.

Of this $3 billion, $1.2 billion would be freely available and would be disbursed in two stages: $500 million by September 30 and $700 million by December 30, according to the Argentine government source.

In 2023, the agency will disburse an additional $1.8 billion.

“This measure…allows us to show the strength we want our central bank to have in reserve,” Argentina’s Economy Minister Sergio Massa said after meeting with IDB officials.

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Report by Nicolas Misculin; Additional reporting by Kanishka Singh; Editing by Stephen Coates

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