U.S. Ends Opposition to Development Loans to Argentina Amid Thaw

  • Lew meets Prat-Gay in Davos, informs counterpart of decision
  • U.S. had voted against World Bank, IDB loans to Argentina

The U.S. ended its opposition to loans for Argentina from multilateral development banks, in another sign the country is reintegrating into the global economy under President Mauricio Macri.

Treasury Secretary Jacob J. Lew informed Argentine Finance Minister Alfonso Prat-Gayof the U.S. decision to end the policy during their meeting Thursday in Davos, the Treasury said in a readout of the meeting. The U.S. will consider each project on its merits, the department said.

Lew commended Prat-Gay’s "focus on taking necessary steps to move Argentina toward stronger and sustainable economic growth," the Treasury said.

The U.S. established the policy in 2011 as a way to pressure former Argentine President Cristina Fernandez de Kirchner to make payments owed to investors and settle with holders of defaulted debt.

The U.S. sought to halt development loans to Argentina by the World Bank and Inter-American Development Bank. The U.S. is the biggest shareholder in both lenders.

Since taking office Dec. 10, Macri has lifted currency controls, let the peso float, cut export taxes on grains and set inflation and fiscal targets as he looks to unwind restrictions implemented by Fernandez.

Prat-Gay said in an interview this week at Davos that Argentina wants to improve relations with the International Monetary Fund and that the government has “nothing to hide,” in reference to allowing an Article IV review of the economy for the first time since 2006.

Argentina has also restarted negotiations with holdout creditors led by billionaire Paul Singer’s Elliott Management to resolve a debt conflict that has kept South America’s second-largest economy estranged from international capital markets since 2001.

On Dec. 18, Inter-American Development Bank President Luis Alberto Moreno announced plans to provide $5 billion in loans over the next four years in Argentina.

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