WASHINGTON, DC (voa) – The International Monetary Fund says it can not approve a $1.3-billion loan to Argentina, which says it deperately needs the money to fight a crippling 41-month economic crisis.
IMF Executive Board members made the decision Wednesday in Washington, following an assessment of the country’s latest economic reforms. Their decision is a blow to Argentina, which is struggling to avoid defaulting on its massive $132-billion public debt.
The IMF says it is working with Argentine officials and is committed to aiding in the development of a sustainable program for dealing with the massive debt.
On Saturday, the Argentine government enacted banking reforms limiting cash withdrawals and transfers abroad. The effort was aimed at stopping panicked Argentines from withdrawing their deposits, amid rumors that their accounts could be frozen.
As a result of the measures, retail sales fell by at least 50 percent Monday and Tuesday.
Another setback came Wednesday when an international rating agency – Moody’s Investors Service – said the banking reforms effectively end the convertibility between the Argentine peso and the U.S. dollar, which had been pegged one-to-one for a decade.
The country’s risk premium shot up to nearly the four-thousand-basis-point level, amid a drop in retail sales and reports of unemployment rates of more than 18 percent.
