The IMF is set to dispense the largest bailout in history to Argentina.
The International Monetary Fund has warned that a worsening crisis in Argentina could affect neighboring countries, and that next year’s presidential election could increase political and economic uncertainty.
In June, the IMF granted Argentina a standby loan of USD $50 billion and granted the early release of funds and increased the loan's value to $57 billion. It’s the IMF’s largest bailout in history and Argentina's second in under 20 years.
"A larger-than-expected recession in Argentina could have a significant spillover effect for neighboring countries with strong commercial exposure," the report states.
Inflation has fluctuated dramatically in Argentina during 2018, it was recorded at 19.2 percent in June and rocketed to around 60 percent in August when the value of the Argentine peso crashed. The peso has lost 52.2 percent of its value in the last year when compared to the US dollar.
“Most people are feeling very uncertain about where the economy is going,” said Daniel Kerner, managing director for Latin America at Eurasia Group.
High inflation has made it difficult for Argentines to make ends meet and pay for basic needs such as food. Gas, electricity, and water prices have also skyrocketed.
“Since Macri, everything is worse. Salaries are never enough to live. You just survive. You cannot save money because bills are very big and your salary too small,” Paula Kushnir, a former Argentine professor, told teleSUR.
Austerity measures and public spending cuts have intensified people’s struggles. About 36,000 workers in the public sector were laid off since 2015 when Macri took office.
“It’s worse for the most vulnerable sectors. I mean, children, handicapped, old people, and poor.”
In 2017, Argentina’s government debt reached 57.1 percent of their GDP (Gross Domestic Product). The highest debt of this kind was recorded in 2002 during Argentina’s Great Depression at 167 percent when the IMF was monitoring the country’s economic policies.
“These events have raised questions regarding the country's relationship with the IMF because they happened while its economic policies were under the close scrutiny of an IMF-supported program,” a 2003 report from the Independent Evaluation Office (IEO) of the IMF, stated.
Argentina’s general election will be held next year. While Macri’s popularity with citizens has been sinking, foreign investors are concerned with the course of Argentina's economic situation if he isn’t re-elected.