Which Country Has a 42.5% Interest Rate? It’s Argentina.
Posted on 02/19/2022
The Central Bank of Argentina increased its interest rate to 42.5%. The central bank raised the interest rate by 2.5%. The increase marks its second rate hike for 2022. Staff at the International Monetary Fund (IMF) have called for interest rates in Argentina to exceed annual inflation running at 51% as part of a pending program to reschedule the government’s US$ 40 billion of outstanding debt with the IMF. Argentina is dealing with high inflation and an ongoing debt crisis. Argentina defaulted on its sovereign debts in May 2020, the ninth such occurrence since the country became independent.
The Central Bank of Argentina will create a new 180-day note, known as a Notaliq, that will have a nominal rate of 47%, according to the statement.
Argentina remains in talks with the IMF on a new financing program. The talks are over refinancing US$ 44.5 billion in debt with the IMF. The IMF’s Executive Board met Wednesday to discuss the state of negotiations. The Argentine government wants an IMF staff-level agreement before the March 22 maturity of a US$ 2.85 billion payment that the country can no longer afford.
China
The Central Bank of Argentina is waiting for the signature of a swap with China for US$ 3 billion. In February 2022, Argentina joined China’s Belt and Road Initiative (BRI), strengthening bilateral political and trade relations. The measure also advanced China’s interests in Latin America.
