Argentina and the International Monetary Fund (IMF) have agreed on a three-year 50 billion dollar (£37 billion) stand-by financing deal aimed at strengthening the South American country’s economy and helping it fight inflation.

The IMF said the staff-level agreement would be subject to approval by the international body’s executive board, which will consider Argentina’s economic plan in the coming days.

In Argentina, where many have criticised the government for turning to the IMF, finance minister Nicolas Dujovne said the funds would be available after the executive board meets on June 20.

“The package includes an immediate withdrawal of 30 percent, or 15 billion dollars (£11 billion), and then we will see,” he said at a news conference.

Terms of the arrangement include the goals of reducing the Argentine government’s budget deficit by 2020 and of bringing down inflation to 17% by 2019, 13% by 2020 and 9% by 2021, Mr Dujovne said.

.@Lagarde: IMF staff and the authorities of #Argentina have agreed on a plan to strengthen the economy for the benefit of all Argentines. Pleased that we can contribute to this effort by providing US$50 billion in financial support. https://t.co/gh1CDOqaTH pic.twitter.com/aoVz82dAR3 — IMF (@IMFNews) June 7, 2018

Argentina’s consumer prices have been rising an estimated 25% a year, one of the world’s highest inflation rates.

“I am pleased that we can contribute to this effort by providing our financial support, which will bolster market confidence, allowing the (Argentine) authorities time to address a range of long-standing vulnerabilities,” said Christine Lagarde, the IMF’s managing director.

President Mauricio Macri announced in May that his government was seeking a financing deal with the IMF following a sharp devaluation of Argentina’s currency and a tough global economic outlook.

That decision rekindled bad memories for Argentines who blame the IMF’s austerity policies for the country’s worst economic crisis in 2001, when one out of every five Argentines were jobless and millions were thrown into poverty.

Thousands have joined in protests against Mr Macri’s move to get IMF financing as well as his government’s belt-tightening measures, including the elimination of subsidies for utility rates.

IMF officials said Argentine authorities had pledged to maintain a floor under social assistance spending during the three-year duration of the programme.

Mr Macri said the deal was needed to avoid another economic implosion. The financing arrangement “is a very important starting point,” he told reporters several hours before the deal was announced.

He promised the deal would not harm the estimated one-third of Argentines who are poor.

The IMF forecasts that economic growth in Argentina will slow from last year’s 2.9% to only 2% this year due to a drought that hurt agriculture production and the government’s efforts to rein in inflation.

PA Media