International Monetary Fund chief Christine Lagarde said on Thursday she is ready to aid Argentina and wants talks on a financing package to be finalized quickly. Lagarde said she instructed the IMF team to continue discussions on a loan program with the goal to “reach a rapid conclusion.”
I stressed my strong support for Argentina's reforms to date, and expressed the Fund's readiness to continue to assist the government, she said in a statement following her meeting with Argentina Economy Minister Nicolas Dujovne.
Despite the reform efforts, Argentina once again finds itself facing a falling currency, high debt and soaring inflation. Recent market turbulence has rocked Latin America's third-largest economy, prompting President Mauricio Macri to announce on Tuesday that he would request IMF help as a preventative measure.
Lagarde said she and Dujovne discussed how the IMF can best help the authorities strengthen the Argentine economy in light of renewed and significant financial market volatility.
Dujovne also met on Thursday with US Treasury Under Secretary for International Affairs David Malpass, who reiterated strong support for the Macri administration's market-oriented reform program.
Treasury said in a statement that he welcomed the talks with the IMF. US support is key since it holds veto power in the IMF. Argentina is seeking a high access stand by financing arrangement which would provide funds above the normal loan amount, but officials have not said how much they are requesting.
IMF stand-by loans last for up to three years, but more usually last 12-24 months. They require regular reviews by IMF staff to make sure the government is following through on reform commitments and meeting targets for things such as spending cuts and pension reforms.
As US interest rates rise, investors in recent weeks have been fleeing Argentina, driving up demand for US dollars, and driving the peso down.
Going to the IMF is a risky move for Macri, given the bitter history the country has with the Washington-based lender, and the negative views on the conditions the fund might require.
Meanwhile the White House said on Thursday that United States supports president Mauricio Macri’s economic reform program..
“The United States supports the economic reform program of President Mauricio Macri of Argentina, which is market-oriented, growth-focused, and has improved Argentina’s future,” the White House statement said.
“President Macri has the right vision for the Argentine economy and has made important strides towards modernizing the country’s economic policy,” it said.