The IMF will disburse $12 billion by next Tuesday, while another $2 billion will become available by June.
“Key pillars of the program include maintaining a strong fiscal anchor, transitioning towards a more robust monetary and FX regime, with greater exchange rate flexibility,“ it added in a statement.
Argentina will eliminate major parts of the so-called “cepo” capital controls that have restricted access to foreign currency, the central bank said in a statement.
“As of Monday, we will be able to put an end to the foreign exchange restrictions which were imposed in 2019 and which limit the normal functioning of the economy,“ Economy Ministry Luis Caputo said at a press conference.
The new exchange rate system could allow the peso to weaken almost a third if the currency were to hit the weaker edge of the band, although the central bank is likely to have some tools to intervene. The band will expand 1% each month, the bank said.
Funds from the IMF deal will be used to recapitalize Argentina’s central bank and the government expects they will help usher in a healthier currency, reduce inflation and allow for tax cuts, Caputo said.
Argentina needs the financial firepower to bolster depleted foreign currency reserves that are in the red on a net basis and have been falling in recent weeks, amid sticky inflation and a country risk index that has started to rise again.
“This is a devaluation, which rather goes against what the government would have intended to calmly get to elections,“ said economist Ricardo Delgado, referring to midterm legislative elections later in the year.
“It’s a bit surprising that at this time of global volatility, the controls are being lifted,“ he added.
Read More Details
Finally We wish PressBee provided you with enough information of ( Argentina seals $20 billion IMF deal, tears down currency controls )
Also on site :