MENDOZA, Argentina (Reuters) - The Inter-American Development Bank’s (IDB) new loans to Argentina next year will be similar to 2018’s $2.35 billion, the lender’s representative in the country said on Sunday, culminating a jump in lending in the past four years.
Jose Luis Lupo, the IDB’s Argentina representative and Southern Cone manager, told reporters on the sidelines of the multilateral development bank’s annual meeting that Argentina could overtake Brazil as the largest debtor to the Washington, D.C.-based lender in the next one to two years.
That would mark a substantial shift from 2014, when the IDB loaned just $660 million to Latin America’s No. 3 economy, which was in default under former populist President Cristina Fernandez. Loans jumped to $1.1 billion in 2016, after President Mauricio Macri resolved a dispute with holdout creditors.
“(Argentina) has improved its credit rating in markets enormously, so I am optimistic that in 2019 we will maintain these levels,” Lupo said, adding that Argentina has been the largest recipient of new IDB loans in 2017 and 2018.
Argentina’s Finance Minister Luis Caputo previously said $2.3 billion could be a “floor” for 2019. Lupo said the IDB’s total lending for Macri’s first term, which ends in 2019, would exceed the $6 billion agreed at the start of Macri’s term by at least one-third.
The bank has $10 billion in outstanding commitments to Argentina across 66 projects, half of which has not been paid out yet. For 2018, the $2.3 billion is spread across 13 projects, including infrastructure initiatives and urban integration in poor Buenos Aires neighborhoods.
“There is consensus in the region that the level of investment is very low,” Caputo said on Sunday. “We need to practically double the level of infrastructure investment.”
This year’s funding also includes $200 million in loans conditional on Argentina passing legislation designed to improve gender equality, which could include boosting women’s pay or extending paternity leave. Macri devoted a large portion of a speech this month marking the opening of the 2018 congressional session to gender issues.
The IDB provides Latin American countries with 25-year loans with five-year grace periods at a rate less than 1 percent above the Libor rate. Last year, Argentina received financing of about $4 billion from multilateral lenders, helping to cover a fiscal deficit worth 3.9 percent of gross domestic product (GDP).
The government aims to lower its primary deficit to 3.2 percent of GDP this year.
Reporting by Luc Cohen; Editing by Lisa Shumaker