IMF says Argentina loan terms under discussion

The board of the International Monetary Fund on Friday concluded an informal meeting on a loan program for Argentina but offered scant new details on the nature of pending support for the troubled Latin American economy.

A crisis of confidence in the Argentine peso has seen it plunge nearly 20 percent over the past six weeks and forced Argentina to seek a financial lifeline from the IMF.

In a statement, IMF Managing Director Christine Lagarde stressed that Buenos Aires would have political ownership of the program, which she said needed support from the Argentine public.

“This will be Argentina’s economic program,” Lagarde said in a statement.

“The authorities stressed that goals of the program would include creating a clear path to strong, sustained, and equitable growth and robust job creation,” the statement said. “We fully endorse those goals.”

Argentina requested the loan last week after financial turbulence hit the currency of Latin America’s third-largest economy, as investors concerned by Argentina’s high inflation yielded to the lure of a strong dollar.

Despite reform efforts, the country once again finds itself facing a falling currency, high debt and soaring inflation.

The currency weakened leading up to the IMF announcement but strengthened following its release, having gained one percent toward 1900 GMT at 24.4017 to the dollar.

– Building ‘social consensus’ –

Lagarde appeared to acknowledge that IMF support for Argentina could come with severe political hazards, given the bitter history the country has with the Washington-based lender, and the negative views on the conditions the fund might require.

Opinion polls say as many as 75 percent of Argentinians oppose any agreement with the IMF, which many link to painful memories of past economic and social crisis, which culminated in 2001 with a sovereign debt default, for which many Argentinians blame the IMF.

More than a decade ago, Argentina paid off its last IMF loan and severed relations with the Fund.

Thousands demonstrated in Buenos Aires on Wednesday and Thursday against an IMF bailout, marching to government offices and brandishing anti-IMF banners.

Lagarde said Buenos Aires had been “conscious of the need to build and maintain social consensus.”

Argentina will seek an “exceptional access” stand-by arrangement, the terms of which remain under discussion between IMF and Argentine officials, according to Lagarde.

IMF stand-by loans last for up to three years, but more usually last 12-24 months.

They require regular reviews by IMF staff to make sure the government is following through on reform commitments and meeting targets for things such as spending cuts and pension reforms.

Argentina’s economy grew in 2017 and the country this year hopes to cap inflation at 15 percent but still faces currency devaluation and mounting prices.