Argentina’s economy minister sounded upbeat on Wednesday about clinching a new deal with the International Monetary Fund after two days of talks in Washington, and said had sought U.S. support for securing approval from the IMF’s board.
The Argentine peso stronger at 38.52 per dollar on Wednesday, marking a rare pause in losses that have shaved more than 50% off its value this year.
Economy Minister Nicolas Dujovne said he believed a deal to release early disbursements from a US$ 50 billion standby loan agreement with the IMF could be put to its board by the end of the month, helping to shore up investor confidence in Latin America’s third-largest economy.
Argentina has already received US$ 15 billion from the credit line, which was agreed upon in June but has failed to clear up concerns about the country’s ability to pay off its debt.
“I had a productive meeting,” Dujovne said of his talks with IMF Managing Director Christine Lagarde and First Deputy Managing Director David Lipton. “I regard the progress we have made with enormous confidence and I am sure the reworking of the agreement will enable us to leave behind these days of anguish.”
“We’re looking at timeframes and many other questions in terms of which part of the program is precautionary,” Dujovne said, adding that the Fund’s board could vote on a revised deal before the end of the month.
The news report sent Argentina's bond prices higher on Wednesday and helped Argentina's Merval stock index close 4% higher.
Dujovne said that while Argentine officials had not spoken about direct financing from the United States, he had spoken with U.S. Treasury Secretary Steven Mnuchin about backing Argentina’s bid to win the IMF’s approval for a new deal.
“The U.S. Treasury’s support for Argentina manifests itself through the support it exercises as a shareholder in the International Monetary Fund,” Dujovne said.
The United States controls 16.52% of votes in the IMF, the largest of any country by far.
On Tuesday, as fresh talks between Argentine officials and the IMF started, U.S. President Donald Trump spoke with Argentina’s center-right President Mauricio Macri by phone and voiced support for his handling of Argentina’s crisis.
Dujovne said he would return to Buenos Aires as planned on Wednesday while his team continues to hammer out the details for a new deal.
The Argentine central bank has sold more than US$ 14 billion of reserves this year, including US$ 100 million on Wednesday even after the peso reversed its initial losses and began to climb.
However many many in Argentina believe Macri’s government lacks the sufficient political support will to implement unpopular spending cuts that are expected to be part of a revamped IMF deal.
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!
”...many in Argentina believe Macri’s government lacks the sufficient political support will to implement unpopular spending cuts (as) part of a revamped IMF deal.Sep 08th, 2018 - 02:24 pm -3
Oh, but not to worry.
U.S. President Donald Trump...voiced support for (Macri's) handling of Argentina’s crisis.”
Argentines are soooo relieved.