IMF agrees to $50 billion deal to help Argentina's economy

In this photo released by Argentine Presidential press office, Argentina's President Mauricio Macri holds up his glass for a toast with journalists to celebrate Journalist Day at the government house in Buenos Aires, Argentina, Thursday, June 7, 2018. Argentina and the IMF have agreed on a $50 billion stand-by deal aimed at strengthening the South American country's economy, announced on Thursday. (Argentina Presidency via AP)
FILE - In this May 10, 2018 file photo, International Monetary Fund (IMF) Managing Director Christine Lagarde, right, meets with Argentina's Treasury Minister Nicolas Dujovne, at the IMF in Washington. Argentina and the IMF have agreed on a $50 billion stand-by deal aimed at strengthening the South American country's economy, announced on Thursday, June 7, 2018. (AP Photo/Jacquelyn Martin, File)

WASHINGTON — Argentina and the International Monetary Fund agreed Thursday on a three-year $50 billion stand-by financing deal aimed at strengthening the South American country's economy and helping it fight inflation.

The IMF said the staff-level agreement will be subject to approval by the international body's executive board, which will consider Argentina's economic plan in the coming days.

In Argentina, where many have criticized the government for turning to the IMF, Finance Minister Nicolas Dujovne said the funds would be available after the executive board meets June 20.

"The package includes an immediate withdrawal of 30 percent, or $15 billion, and then we will see," he said at a news conference.

Terms of the arrangement include the goals of reducing the Argentine government's budget deficit by 2020 and of bringing down inflation to 17 percent by 2019, 13 percent by 2020 and 9 percent by 2021, Dujovne said.

Argentina's consumer prices have been rising an estimated 25 percent a year, one of the world's highest inflation rates.

"I am pleased that we can contribute to this effort by providing our financial support, which will bolster market confidence, allowing the (Argentine) authorities time to address a range of long-standing vulnerabilities," said Christine Lagarde, the IMF's managing director.

President Mauricio Macri announced in May that his government was seeking a financing deal with the IMF following a sharp devaluation of Argentina's currency and a tough global economic outlook.

That decision rekindled bad memories for Argentines who blame the IMF's austerity policies then for the country's worst economic crisis in 2001, when one out of every five Argentines were jobless and millions were thrown into poverty. Thousands have joined in protests against Macri's move to get IMF financing as well as his government's belt-tightening measures, including the elimination of subsidies for utility rates.

Critics of the deal asked how the government will meet deficit-reduction goals without making cuts to social assistance, subsidies and employment.

"The goals of the agreement with the IMF will mean thousands of layoffs, a lower budget for health and education, belt-tightening for the retired and labor reform. In short, a series of measures against the people," said leftist lawmaker Nicolas del Cano.

IMF officials said Argentine authorities have pledged to maintain a floor under social assistance spending during the three-year duration of the program.

Macri said the deal is needed to avoid another economic implosion. The financing arrangement "is a very important starting point," he told reporters several hours before the deal was announced.

Macri, a conservative who took office in 2015, has said the IMF money will allow Argentina to avoid another economic implosion and promises the deal will not harm the estimated one-third of Argentines who are poor.

The IMF forecasts that economic growth in Argentina will slow from last year's 2.9 percent to only 2 percent this year due to a drought that hurt agriculture production and the government's efforts to rein in inflation.

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Associated Press writer Debora Rey in Buenos Aires, Argentina, contributed to this report.

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Luis Alonso Lugo on Twitter: http://www.twitter.com/luisalonsolugo

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