IMF bails out Argentina

Argentina has been paralysed by three general strikes this year

By BBC South America correspondent James Reynolds

The International Monetary Fund has announced that Argentina will receive an aid package worth $39.7bn, in an effort to rescue its economy from its long-running crisis.

Argentina - Latin America's third largest economy - has been suffering severe economic problems for more than two years, and there was concern that without help the country might default on foreign debt repayments due next year.

Aid package will come as a relief for the president

The IMF agreed to release the funds after the Argentine Congress passed a budget that included a series of austerity measures.

International institutions hope it will be enough to restore confidence in the Argentine economy.

Tough time

The Argentine government hopes to use much of the package in the following way:

• It will use the money as a guarantee to show investors that there's now no way that it can default on its debt payments next year.

• Once investors see this, the logic goes, they will be more likely to continue working in Argentina.

• The more they invest, the greater the chances of economic growth in Argentina in the near future.

The announcement of the aid package will come as a relief to President Fernando de la Rua.

He has only been in office a year but he has had a tremendously tough time.

He has tried to steer through an economic austerity plan designed to cope with the effects of the recession, but it is been widely opposed and the president has had to deal with angry union protests in many parts of the country.

Mr de la Rua will now hope that this aid package brings about some degree of economic stability to his country because if this package fails, he really does not have very many other options.