Argentina and the International Monetary Fund have reached an agreement for a three-year, $50 billion standby arrangement, subject to IMF board approval, the government and the Fund said on Thursday.

Argentina requested IMF assistance on May 8 after its peso currency weakened sharply in an investor exodus from emerging markets.

The deal marks a turning point for Argentina, which for years shunned the IMF after a devastating 2001-2002 economic crisis that many Argentines blamed on Fund-imposed austerity measures. The turn to the lender by President Mauricio Macri has led to protests in the country.

The government says it sought financing to provide a safety net and avoid the frequent crises of Argentina’s past.

“There is no magic, the IMF can help but Argentines need to resolve our own problems,” Treasury Minister Nicolas Dujovne said at a news conference.

Dujovne said he expected an immediate disbursement of 30 percent of the funding, or about $15 billion.

As part of the agreement, Argentina will seek to reduce its fiscal deficit to 1.3 percent of gross domestic product in 2019, down from 2.2 percent previously, a statement from the president’s office said. It calls for fiscal balance in 2020 and a fiscal surplus of 0.5 percent of GDP in 2020.

“This measure will ultimately lessen the government financing needs, put public debt on a downward trajectory, and as President Macri has stated, relieve a burden from Argentina’s back,” IMF Managing Director Christine Lagarde said in a statement.

The IMF board will review the deal in coming days, the lender said. Speaking alongside central bank governor Federico Sturzenegger, Dujovne noted the agreement was well above Argentina’s IMF quota. A minimum $20 billion had been expected based on Argentina’s quota.

As widely expected, the government will also send a proposal to Congress to reform the central bank’s charter and strengthen its autonomy.

Argentina also agreed to new inflation targets of 17 percent for 2019, 13 percent for 2020 and 9 percent for 2021. Sturzenegger said there would not be an inflation target for 2018.

In a separate statement, the president’s office said it had clinched agreements for an additional $5.65 billion from the Inter-American Development Bank, the World Bank and the CAF development bank over the next 12 months.

Source: cnbc economy
Argentina clinches billion International Monetary Fund financing deal