WASHINGTON – Argentina formally asked the International Monetary Fund on Thursday for a Stand-By financing agreement to deal with the crisis caused by the abrupt depreciation of the peso.
“(Argentine Finance) Minister Dujovne and I met today to discuss how the IMF can best help the authorities strengthen the Argentine economy in light of renewed and significant financial market volatility,” said IMF Director Christine Lagarde in a statement made public following her meeting with Dujovne.
“I stressed my strong support for Argentina’s reforms to date, and expressed the Fund’s readiness to continue to assist the government. Minister Dujovne has requested that our teams work together toward a high access Stand-By Arrangement in support of the authorities’ comprehensive economic program,” Lagarde added, although she did not mention the size of the loan program.
Analysts, however, have placed the requested financing at around $30 billion, the disbursement of which would be conditioned on fulfilling certain macroeconomic objectives.
This type of credit arrangement is the most common granted by the IMF, but it implies a more significant intervention by the institution in the recipient nation’s economic policies than the alternative, a Flexible Credit Line.
Lagarde said that her meeting with Dujovne was “a timely opportunity for (him) to reaffirm the (Argentine) government’s economic priorities and plans, and for me to hear how best the IMF can support the government’s important efforts.”
“I have briefed the IMF’s Executive Board on the progress we have made and I have instructed the IMF team to continue discussions toward a Fund-supported program,” Lagarde added.
Despite the fact that no information was provided about the next meeting to discuss the matter, expectations are that the two parties will meet again in the coming weeks to discuss the details of an agreement.
Dujovne’s lightning visit to Washington comes after on Tuesday Argentine President Mauricio Macri announced that he had initiated conversations with the IMF to obtain “financial support” with an eye toward avoiding a new “crisis.”