Region:
Argentina
Category:
Politics

IMF says it will work with Argentina on 'revised plan' to help its ailing economy

  • Argentina IMF deal could mean reversal of Macri's grain tax cuts
    IMF vows 'full support' for Argentina amid economic crisis Argentina IMF deal could mean reversal of Macri's grain tax cuts
Region:
Argentina
Category:
Politics
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Argentina's Economy Minister Nicolas Dujovne heads to Washington on Monday to thrash out a hastily revised loan deal with the International Monetary Fund to help revive South America's second-largest economy.

Dujovne will need to outline a convincing austerity program to restore investor confidence that has plummeted along with the nation's currency, analysts say.

The minister said at the weekend his mission was to "continue to progress" talks with the IMF "on additional disbursements in 2019."

Treasury Minister Nicolas Dujovne promised to announce measures on Monday to reduce the South American country’s 2019 primary deficit - its borrowing needs before debt servicing - in an effort to stem the slide in the peso, one of the world’s worst performing currencies this year.

Argentina has already agreed to cut its primary deficit to 1.3 percent of gross domestic product (GDP) under a $50 billion International Monetary Fund program inked in June, prompting protests by unions. Now, Dujovne has pledged deeper deficit cuts before traveling to Washington to negotiate with the IMF for speeding up aid.

The return of export taxes plus a sharp reduction in the number of ministries were being discussed at crisis talks headed by Macri this weekend, local media reported.

The government has not detailed its new primary deficit target or what measures it expects to take to stabilize the currency after a whopping 16 percent depreciation last week, but investors want decisive action.

“The market will likely be expecting a 2019 budget that makes a credible attempt to all but eliminate the primary deficit,” said Jeffrey Lamoreaux, senior analyst at Fitch Solutions in New York.

He said markets expected Macri, who took office in December 2015 after 12 years of left-wing administrations, to implement a combination of agricultural export taxes and reductions in subsidies and social spending.

“The risk for Macri is that he alienates one of the few segments still behind him,” Lamoreaux said.