Argentina asks for early release of IMF funds, peso hits new low

President of Argentina Mauricio Macri

President of Argentina Mauricio Macri

He insisted the path taken by Mr Macri since he took office in December 2015 was one "of fiscal balance, development and growth".

The peso slipped about 7 percent against the dollar Wednesday and was down another 5 percent early Thursday. The crisis 17 years ago resulted in one of every five Argentines being unemployed, millions sliding into poverty and some reporting going hungry.

The run on the peso prompted Argentina to turn to the International Monetary Fund for the $50-billion credit line earlier this year.

Meanwhile, the peso slumped against the dollar as rising USA interest rates lured investors to pull greenbacks out of Argentina.

Macri said in a televised address that Argentina had agreed with the IMF "to advance all necessary funds to guarantee compliance with next year's financial programme".

The decision aims to "eliminate any uncertainty that was created before the worsening of the worldwide outlook", Macri said.

IMF Managing Director Christine Lagarde said in a statement that she had instructed her staff to "reexamine the phasing of the financial program".

On Wednesday Mr Macri asked the IMF to speed up its $50bn bailout and the fund agreed to revise the original plan, citing "more adverse" market conditions.

Argentina has US$ 24.9 billion in peso- and foreign currency-denominated debt payments due next year, according to official data.

"The market is saying: 'Just the fact that you are engaging in this conversation makes me very, very nervous, '" Daniel Osorio, president of New York-based consultancy Andean Capital Advisors, said in a telephone interview.

Investors are concerned that with high inflation, a weak economy and fallout from a global selloff in emerging markets, Argentina may have problems meeting its debt obligation in 2019.

The Central Bank of Argentina raised its benchmark interest rate to 60%.

"The dollarization of assets is fueled internally by Argentine's distrust of the peso, because the government has promised much on the economy but hasn't delivered", said Sigaut.

Efforts by the Argentinian central bank to stabilize the national currency by raising a key interest rate to 60 percent have done little to soothe rapidly deteriorating sentiment in Latin America's third-largest economy.

Earlier Marcos Pena, President Mauricio Macri's cabinet chief, was forced to deny the government was facing an economic disaster.

All that, combined with the budget cuts promised to the International Monetary Fund that will slow down public works projects, is contributing to a recession that will result in an economic contraction of 1% this year, according to the government.

The political fortunes of Macri, who until recently had been expected to easily win re-election late next year, may also be waning. The government says it expects the country's economy to contract 1 percent in 2018 but grow by at least 1.5 percent next year.

"I do know that these tumultuous eventualities generate alarm amongst a kind of you ..."

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