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IMF staff approves review of Argentina reform program

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Washington (AFP)

An International Monetary Fund team on Monday announced its support for Argentina's crisis response program, a step that will lead to the release of nearly $11 billion under its financial aid plan.

The IMF board is expected to review the staff recommendation in coming weeks and likely will approve the third review of the beefed-up, three-year loan program, according to the statement.

"We commend the authorities' policy efforts and strong determination to address macro-economic imbalances and advance their economic stabilization plan," IMF mission chief Roberto Cardarelli said.

He said government reforms are bringing down the high budget deficit, one of the key causes of the crisis last year, and met the deficit target.

The country is in recession and the peso lost half its value against the dollar in 2018.

While the IMF hailed the government's efforts to "mitigate the social impact" of the belt-tightening measures, thousands took to the streets in cities around the country last month to protest against the high price for basic foods and goods.

Since President Mauricio Macri came to power in 2015, electricity bills have gone up 2.1 percent and gas three percent. The government blamed the increase on the removal of significant subsidies in place under the previous administration.

Still, Cardarelli said, "Economic activity has been weak but there are good prospects for a gradual recovery."

Inflation remains high and it will take some time to bring it down, but the IMF praised the central bank's efforts to reverse the direction.

Argentina originally secured a $50 billion financing package in June before returning to the IMF to ask for more in October. The IMF granted an extra $6 billion and accelerated disbursements in exchange for tougher conditions.

The government statistics bureau said the economy contracted 3.5 percent in the third quarter of 2018, following a 4.0 percent drop in the second quarter, and plunged 7.5 percent in November alone.

The IMF estimated Argentina's economy fell by 2.6 percent last year and will drop another 1.6 percent in 2019.

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