BUENOS AIRES (Reuters) -Argentina and the Inter-American Development Bank (IDB) agreed on Tuesday to expand financing to the country by $400 million this year, with further talks that could bring total financing to more than $4 billion in 2022 and 2023.
The agreement comes as Argentina seeks to leave behind financial turmoil that has raised the inflation rate to over 90% this year, pushing consumption and economic activity down and moving 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.
In a statement on Tuesday evening, the IDB said it was increasing two previously announced loans by $200 million each in the coming months, with one of them, now totaling $700 million, to be disbursed this month.
"Together, these loans would enable the IDB to increase support for Argentina from $800 million to $1.2 billion in the final quarter of 2022," the bank said.
A government source told Reuters that the agreement follows negotiations in Washington between representatives from Argentina's economy ministry and the IDB, adding that the country urgently needs foreign currency to avoid a depreciation of the peso in the midst of high inflation.
In addition to the $1.2 billion, the IDB said its "financing potential for the rest of 2022 could include additional programs totaling $725 million."
If approved, those loans would bring the bank's total 2022 financing to Argentina to $2.37 billion, the IDB said.
Another $1.8 billion in loan programs is in advanced discussions for dispersal in 2023.
"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.