Qatar lends Argentina USD 580 million to avoid IMF default

The clock was ticking in Qatar, and Argentina was on the brink of defeat, but snatched victory from its jaws after… securing a USD 580 million emergency loan from Doha to pay the International Monetary Fund (IMF) one day before a default deadline.

The parallels with the country’s World Cup victory are easy to draw, but this time the win was much smaller, merely averting disaster as Economy Minister Sergio Massa continues to walk a fine line between repaying the IMF on time and avoiding an unpopular devaluation in the midst of election season. 

Mr. Massa reached a preliminary agreement with IMF staff last week to postpone maturities until a new president is elected later this year, but the IMF board still has to give its final approval, leaving the country to rely on loans from China and the CAF development bank to pay USD 2.7 billion before a July deadline

With another USD 700 million due in the first week of August, the country made an unexpected call to the government of Sheikh Mohammed bin Thani to ask for a new loan to pay its creditors.

Qatar agreed to lend Argentina almost the full amount it needed at a very low interest rate of 4 percent per year, significantly cheaper than what the country would pay on the open market. This money will be used to pay the IMF later today.

Argentina is currently struggling with a large trade deficit, which means it does not have enough hard currency to pay its foreign creditors. Normally, this would lead to a weakening of the currency, making the country more competitive internationally in order to afford its foreign payments.

Argentina’s exchange rate regime, however, is anything but normal, so the country has been hemorrhaging hard currency reserves for years, and the situation was exacerbated by a record drought in 2023.

Analysts expect some form of devaluation after the election season, while a normal harvest next year and reduced energy imports would also help Argentina slowly dig its way out of the financial hole it is currently trapped in.

• Read more: Peronism rallies around Sergio Massa as presidential candidate in Argentina

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