Argentina promotes economic growth with IDB support

The $300 million loan is the first operation of a $2.5 billion package of fast disbursement projects over the next 12 months

Argentina will modernize the institutional frameworks for taxation and policy-making, aiming to strengthen private and public investment that promote economic growth, with a $300 million loan from the Inter-American Development Bank (IDB).

This is the first of two programmatic policy-based loans (PBP) to be executed by the Ministry of Finance to address Argentina’s challenges of boosting growth through private and public investment, supporting the government in its agenda of reforms to reduce constraints on private investment, and strengthening public investment processes.

The loan is specifically geared toward laying the legal groundwork for fiscal, investment, and entrepreneurship reforms at the national level, as well as commitments to reforms at the provincial level.

This is the first operation approved after the commitment made in June by the IDB to support the country with a program of fast disbursement operations for a total of $2.5 billion over the next 12 months.

The IDB support comes at a time when Argentina faces a structural challenge of accelerating its medium-term growth and has negotiated new financing from several multilateral organizations. The main obstacle to growth since 1999 has been the low contribution of capital per worker. Raising the level of capital per worker will require greater private investment and efficiency in public investment.

The IDB financing is for a 20-year term, with a 5.5-year grace period and a LIBOR-based interest rate.