BUENOS AIRES – Argentine President Mauricio Macri said on Tuesday that he had launched negotiations with the International Monetary Fund (IMF) for a credit line to help address the situation created by the peso’s steep fall.
“A few minutes ago, I spoke with IMF director Christine Lagarde and she confirmed that we will start working today to reach an agreement that will allow us to strengthen our growth and development plan and help us address the new global situation,” Macri said in a statement.
“This will allow us to avoid crises like the ones we’ve had in our past,” he added.
On Tuesday, the peso fell by an additional 5.38 percent against the dollar to $1 = 23.40 pesos, compared with 18.65 pesos to the greenback at the start of this year.
The national currency has continued to slide despite last week’s three interest rate hikes that brought Argentina’s benchmark interest rate to 40 percent.
Macri highlighted his “conviction” that the country is following “the only possible path to escape economic stagnation, while avoiding a great economic crisis.”
“For this, we are implementing gradualist economic policies that seek to correct the budget disaster that we inherited,” Macri said, referring to the 2007-2015 government of Cristina Fernandez.
The president, however, recognized that Argentina’s main “problem” is being “one of the countries in the world that most depends on external financing.”
Under Fernandez’s predecessor and late husband, Nestor Kirchner, Argentina paid off in full its obligations to the IMF and successfully rescheduled debt to most private creditors.
But a group of holdouts, led by US hedge fund billionaire Paul Singer – a contributor to Macri’s 2015 presidential campaign – rejected the rescheduling, demanding repayment in full for Argentine bonds they bought for pennies on the dollar following the default of late 2001.
Once in office, Macri quickly reached agreement with the holdouts, who received $9.3 billion.
The origins of the 2001 default, which was then the largest in history and occurred amid a financial meltdown and economic depression, went back to Argentina’s 1976-1983 military regime, which presided over a 465 percent expansion in public indebtedness.