IMF studying Argentina request for early help as peso crashes
BUENOS AIRES, (Reuters) - The International Monetary Fund said it was studying a request from Argentina to speed up disbursement of a $50 billion loan program after a collapse in investor confidence in President Mauricio Macri’s government sent the peso tumbling more than 7 percent on Wednesday.
It was the biggest one-day decline in the peso since the currency was allowed to float in December 2015. It closed at a record low of 34.10 per U.S. dollar and is down more than 45.3 percent against the greenback this year, prompting massive central bank interventions.
Nerves are frayed in Latin America’s No. 3 economy as it struggles to break free from its notorious cycle of once-adecade financial crises. The last one, which was punctuated by a 2002 debt default, tossed millions of middle-class Argentines into poverty.
The run on the peso prompted Argentina to turn to the IMF for the $50 billion credit line earlier this year. As part of the deal, Argentina’s government pledged to speed up plans to reduce the fiscal deficit.
But given the peso’s continued depreciation, which makes the country’s dollardenominated debts more expensive to pay, investors are increasingly concerned that the IMF help may not be enough.
“We have agreed with the International Monetary Fund to advance all the necessary funds to guarantee compliance with the financial program next year,” Macri said in a televised address on Wednesday. “This decision aims to eliminate any uncertainty.”
“Over the last week we have seen new expressions of lack of confidence in the markets, specifically over our financing capacity in 2019,” Macri said.
IMF Managing Director Christine Lagarde responded by saying in a statement that the multi-lateral lender’s staff would “reexamine the phasing of the financial program.” She said that the “more adverse international market conditions” had not been “fully anticipated” when the IMF and Argentina reached the deal in June.