U.S. ends opposition to multilateral development bank loans to Argentina

WASHINGTON (Reuters) - The United States is ending its policy of opposing most lending to Argentina from multilateral development banks, the U.S. Treasury Department said on Thursday.

U.S. Treasury Secretary Jack Lew informed Argentine Finance Minister Alfonso Prat-Gay of the move on Thursday when the two met in Davos, Switzerland, the department said in a statement. It said the United States will consider each Argentinian project on its own merits.

The policy had been in place since 2011 as part of a larger U.S. campaign to pressure Argentina to pay debts and other obligations to American investors a decade after the South American country defaulted on more than $81 billion of government bonds. It meant the U.S voted against new loans to Argentina at the World Bank and Inter-American Development Bank.

Argentina’s center-right president, Mauricio Macri, has made swift reforms since taking office in December, including resuming talks to reach a deal over the unpaid debts with U.S. hedge funds.

Macri also has eliminated capital controls and cut onerous export taxes as a way of improving the investment climate.

Lew said the United States was ending it policy in light of the new government’s “progress on key issues and positive economic policy trajectory,” the Treasury statement said.

In a tweet, Prat-Gay called the decision by Washington “a concrete example of how to stop fighting with the world” and said it would “allow us to have better roads, more schools, more (social) inclusion.”

Despite the U.S. stance, Argentina secured some multilateral lending after it reached a deal in 2014 with the Paris Club of creditor nations on repaying overdue debts and promised to improve its economic statistics.

The World Bank approved $1.5 billion in loans to Argentina in fiscal year 2015, with $3.5 billion expected in 2016 through 2018. Last month the Inter-American Development Bank talked of providing Argentina $5 billion over the coming years.