Sunday, October 21, 2018
   
Text Size

Site Search powered by Ajax

Argentina's central bank chief resigns amid IMF bailout talks

Luis Caputo's resignation comes as President Mauricio Macri is negotiating additional IMF funding.

Luis Caputo

The president of Argentina's central bank has resigned amid negotiations with the International Monetary Fund (IMF) to bail the South American country out of its volatile economic crisis.

Luis Caputo abruptly quit on Tuesday after just a few months in the position, with a statement from the bank saying it was for "personal reasons".

The resignation comes as President Mauricio Macri is negotiating additional IMF funding, three months after securing a $50bn loan from the international lender to stabilise Argentina's economy.

Caputo is considered close to the centre-right Macri and was finance minister before he was appointed president of the central bank in June.

The bank statement announcing Caputo's resignation said he was doing so with the conviction that a "new agreement with the International Monetary Fund will restore confidence in the fiscal, financial, monetary and exchange situation".

But analysts said there were already rumours he would resign because of "a disagreement with the IMF over monetary policy", according to Argentine economist Gabriel Rubinstein.

Another economist, Fausto Spotorno, told AFP news agency Caputo was never seen as a long-term fixture and "the government's priority is an agreement with the IMF".

Macri is currently in New York City attending the United Nations General Assembly, while back home discontent grew as a 24-hour general strike paralysed the country.

On Monday, thousands of people marched on the streets of capital, Buenos Aires, against the austerity measures expected to be introduced by Macri in order to receive the IMF's biggest ever bailout.

Many in Argentina blame the financial body for the country's worst ever financial crisis between 2001 and 2002, which left one out of every five people unemployed and thrust millions into poverty.

Peso plunge

Argentina's weak economy has been hit by a sharp depreciation of its peso currency and high inflation, forcing the government to reach out to the IMF for help.

After a crisis of confidence beginning in April saw the peso plunge, Argentina negotiated a $50bn bailout loan from the IMF that included an initial $15bn tranche in June.

But that failed to prop up the currency and Macri announced in August he would be seeking an accelerated disbursement of the remainder of the funds that were initially to be transferred over a three-year period.

That sparked two days of damaging drops in the value of the peso, which lost 20 percent against the dollar. For the year, it is down about 50 percent.

Macri responded by announcing new, and unpopular, austerity measures including halving the number of government ministries and restoring taxes on grain exports.

The central bank hiked interest rates to a world-high 60 percent and the peso has remained largely stable since its sudden crash in August.

But restoring faith in the peso has proved difficult with sceptical Argentines believed to be holding $300bn outside of the country's fiscal circuit, either in cash or abroad, in a bid to protect their assets from the peso's woes.


blog comments powered by Disqus

Subscribe via RSS or Email:

Saudi stocks plunge amid pressure o...

Read More

Yemeni president fires PM over poor...

Read More

'Davos in the Desert' faces more ca...

Read More

Khashoggi disappearance: Media comp...

Read More

Sudden jump in US interest rates pr...

Read More

Judge mulls slashing $290m award in...

Read More

Donation

Thanks to all of our supporters for your generosity and your encouragement of an independent press!

Enter Amount:

Featured_Author

Login






Login reminder Forgot login?

Subscribe to MWC News Alert

Email Address

Subscribe in a reader Facebok page Twitter page

Israel pounds Gaza

India's Kerala state devastated

Capturing life under apartheid