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IMF officials in talks with Argentina government after market turmoil

IMF officials in talks with Argentina government after market turmoil

Fund staff to head to Buenos Aires amid fallout from Macri’s setback in primary polls

IMF officials are in talks with Mauricio Macri’s government in Argentina as it develops “policy plans” to tackle the brutal sell-off that has afflicted the Latin American nation since a primary vote this month foreshadowed a populist victory in upcoming presidential elections.

“We are closely following recent developments in Argentina and are in ongoing dialogue with the authorities as they work on their policy plans to address the difficult situation that the country is facing,” Gerry Rice, the IMF spokesman said on Twitter on Tuesday. He added that IMF staff would travel to Buenos Aires “soon”.

Mr Macri, Argentina’s sitting president, suffered a blow in primary elections this month. Alberto Fernández, a populist challenger, is now the clear frontrunner ahead of the presidential election set for October.

The president had negotiated a package of reforms that allowed Argentina to receive a $57bn bailout from the IMF — the largest in IMF history — which could be in peril if Mr Fernández were to secure control of the presidency in the autumn.

The rising chances of victory for Mr Fernández sent Argentine assets, including its currency, the peso, plummeting, jeopardising the economic stability that had returned to the country in recent months.

Nicolás Dujovne, Argentina’s finance minister who was central to the negotiation of the bailout package last year, resigned on Saturday in recognition of the economy’s poor performance since the IMF deal was signed. Mr Macri’s election defeat was seen as a consequence of the economic hardship suffered by many Argentines since last year’s currency crisis.

Mr Dujovne was replaced by Hernán Lacunza, previously the economy minister of the province of Buenos Aires, whose key tasks include continuing negotiations with the IMF ahead of the planned disbursement of the next $5.4bn tranche of the programme by the end of September.

One of Mr Dujovne’s last moves while in government was to design an economic package aimed at alleviating the plight of Argentines suffering from an ongoing recession and inflation of more than 50 per cent.

The package will cost about $740m and could compromise fiscal targets set by the IMF. It included tax breaks, increased subsidies, loans for students and small businesses and a 90-day freeze on petrol prices. Critics said it was too little, too late, and would fail to reverse Mr Fernandez’s 15-point lead in the elections, with the first round of voting due on October 27.

Mr Fernández has attempted to calm market fears by insisting that if he wins the elections he will not crash out of the IMF programme, and instead renegotiate it and extend maturities. One of his economic advisers, Guillermo Nielsen, insisted this week that Mr Fernández was not planning on restructuring Argentina’s debt. es un sitio web oficial del Gobierno Argentino