While Argentina continued it great peso sell-off on Tuesday the country’s finance minister, Nicolas Dujovne went to Washington to try to get an advance on its US$50 billion IMF (International Monetary Fund) loan from which it has already received $US15 billion.
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As the Central Bank, presided over by Argentina’s second richest government official Luis Caputo, sold off another US$3.5 billion of its devalued peso on Tuesday, finance minister Nicolas Dujovne met with IMF Director Christine Lagarde in D.C. in an attempt to get faster access to a chunk of the three-year standby loan.
Since the ink dried on the agreement both parties signed in June and late last week the Central Bank had already sold off some US$6 billion of its currency since the loan came through in late June to try and salvage the country’s tanking economy where inflation rate sits at 30 percent and the interest rate, double that. Dujovne is hoping to convince Lagarde for an advance on the loan to receive the 2020 and 2012 disbursements next year.
Lagarde said of the reunion: “Minister Dujovne, Deputy Governor Cañonero, and I met today to initiate discussions about how the Fund can best support Argentina in the face of renewed financial volatility and a challenging economic environment.
“We will be working together to further strengthen the Argentine authorities’ IMF-backed program. Our common objective is to reach a rapid conclusion to present a proposal to the IMF Executive Board.”
When the loan was given out, the fund director said she was convinced the IMF "financial support (would) bolster market confidence."
By late July Lagarde said Argentina was “unequivocally” making progress on its goals to cut its fiscal deficit. However much of that deficit cutting was being done through increasing already massive cuts to public sector jobs and subsidies and freezing salaries. Last week the peso fell a record 16 percent to 40 against the U.S. dollar, prompting Caputo, who himself has been found guilty of millions of dollars in tax evasion, to continue auctioning off the country’s currency by the billions.
On Monday Dujovne said the new austerity plan will entail slashing US$ 11.7 billion in federal spending through 2020 to meet IMF loan conditions.
For his part, President Mauricio Macri talked with his U.S. counterpart, Donald Trump to try to allay international fears about Argentina’s tanking economy.
The two heads of state are reported to have "continued to maintain fluid contact and expressed their desire to meet again on the margins of the next United Nations General Assembly in New York at the end of September," said a spokesperson for the Macri administration.
The spokesperson told reporters: "Macri had a telephone conversation today for more than 15 minutes with the President of the United States, Donald Trump," adding that Trump said he was aware of the situation in Argentina and accepted President Macri's invitation to make a state visit in November when G20 leaders once again hold a summit in Buenos Aires.
On Monday the president’s office released a Facebook message in which the Argentine head of state said the country’s poor economy was the fault of several factors, among them: a society that’s living beyond its means, previous administrations that governed poorly and that had “much much worse” economies, weather (which affected farming), trade wars between the United States and China, as well an historically high number of conflicts around the globe.
Interior Minister Rogelio Frigerio said that President Trump expressed "full support" for the economic management led by Dujovne.
According to Frigerio, the financial crisis that the Government is going through is "a crisis of confidence."
"It is not enough for us to tell the market what we are going to do, they are hoping for things to materialize," said the official.