Argentina says IMF aid needed to avoid economic crisis

Source: Xinhua| 2018-05-13 05:02:38|Editor: yan
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BUENOS AIRES, May 12 (Xinhua) -- The chief of staff of the Argentinean government, Marcos Pena, said Saturday that asking the International Monetary Fund (IMF) for a "line of financial aid" was needed in order to avoid an economic crisis in the country.

Speaking to a local radio show, Pena said that talks between Buenos Aires and the financial body were only focused on this topic, adding that the government is not "asking the IMF for an economic program."

"In the conversation with the IMF, we are planning more things to reinforce trust," he said.

Argentina turned to the IMF for help after two weeks of currency volatility, with the U.S. dollar reaching its highest point of 2018 against the peso, which traded at 23.73 for one dollar.

The Argentinean central bank (BCRA) has also intervened in the market to halt the slide of the peso, including increasing its base interest rate to 40 percent.

However, Pena warned that "the IMF will not be a magic solution, nor will it complicate things. This depends on us."

On Tuesday, Argentina's Treasury Minister, Nicolas Dujovne, travelled to Washington to meet IMF chief Christine Lagarde and discuss the amount and conditions of any financing.

According to a statement from the treasury ministry, the line of credit would be of the "Stand by" type, one of the IMF's traditional modes of financing but which sees it involve itself in the economic policies of the country in question.

Analysts believe the IMF is likely to offer between 20 and 30 billion dollars to Argentina, although Buenos Aires needs to account for a similar amount on next Tuesday due to the expiration of treasury bonds.

The central bank is set to renew them, however, along with a rise in the interest rate of such bonds.

Also on Saturday, Francisco Cabrera, the production minister, said that the currency fluctuation rate would be overcome in the coming days.

Speaking to the press after a meeting with President Mauricio Macri and industrial leaders, he said "we did not touch upon the issue of the dollar as a problem. We understand it is a circumstantial problem, which will be history in a few days."

Cabrera said that Argentina was facing an issue of "liquidity and not of solvency" after being asked about the potential IMF line of credit.

"The percentage of debt Argentina has is very low compared to the problems we have seen throughout history. The problem is one of liquidity which we know about, because with an interest rate hike in the United States, emerging markets were going to slide against the dollar," he said.

Cabrera added that the slide of the peso had not affected prices in Argentina. "There has still not been changes in prices, it is not our policy to control prices, we want a ... transparent market."