A monitor streams a live feed of Christine Lagarde, managing director of the International Monetary Fund (IMF). (Photographer: Andrew Harrer/Bloomberg)

IMF Seeks `Rapid Conclusion' With Argentina Amid Credit Talk

(Bloomberg) -- The International Monetary Fund’s Christine Lagarde said the lender is seeking a rapid resolution for talks with Argentina over the establishment of a credit line that will help restore confidence in the country’s economy.

Argentina wants a high-access stand-by arrangement, the fund said on Thursday after meetings between Managing Director Lagarde and a team of Argentine officials led by Treasury Minister Nicolas Dujovne. Dujovne also met with officials from the Fund’s Western Hemisphere unit and with David Malpass, the U.S. Treasury undersecretary for international affairs.

"Our meeting was a timely opportunity for Minister Dujovne to reaffirm the government’s economic priorities and plans, and for me to hear how best the IMF can support the government’s important efforts," Lagarde said. "I stressed my strong support for Argentina’s reforms to date, and expressed the Fund’s readiness to continue to assist the government."

Argentina on Tuesday asked the Fund for financing after a five-month-rout in the peso forced the central bank to raise interest rates to the highest in the world, threatening to derail the country’s economic recovery.

Type of Agreement

Dujovne said he won’t discuss the terms or type of agreement Argentina is seeking while the talks with the IMF are ongoing. An agreement will allow the government to "preserve all that we have achieved in our first years in office,” he said in a separate statement.

The Trump administration on Thursday night expressed support for Macri’s "market-oriented, growth-focused" reform program. "President Macri has the right vision for the Argentine economy and has made important strides toward modernizing the country’s economic policy," the White House said in a statement.

The peso gained on Thursday for the first time in four days following the announcement late on Wednesday that the central bank activated a $2 billion credit line with the Bank for International Settlements. The currency rose 0.1 percent to 22.71 per dollar in Buenos Aires, and yields on the century bond fell 13 basis points to 8.12 percent.

“Stopping the run on the peso and reaching an effective IMF deal as soon as possible appear today to be indispensable first steps in the long process of returning confidence to the market," Pablo Waldman, head of strategy at INTL FCStone Argentina, wrote.

Argentina is in talks with the World Bank, Inter-American Development Bank and Development Bank of Latin America (CAF) for additional lines of credit, Finance Minister Luis Caputo said on Thursday evening. The nation isn’t facing another recession in the short-term, and these credit lines should help bolster economic growth, he said.

Thursday’s rebound in local markets may be temporary, traders said, as details on the stand-by agreement are still scant. The government has about 674 billion pesos ($30 billion) of short-term, central-bank debt that matures on May 16.

“The devil’s in the details with respect to terms,” said Michael Roche, a fixed-income strategist at Seaport Group in New York. “But I think Mr. Macri can use the conditions imposed by the Fund as political cover to get some difficult measures enacted.”

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