- Thomson Reuters
- Argentine President Mauricio Macri said he has asked the International Monetary Fund to speed up bailout payments to the country.
- The country received the largest bailout in IMF history in June.
- Watch the Argentine peso in real time here.
Argentina’s currency sank Wednesday after President Mauricio Macri said he has asked the International Monetary Fund to speed up bailout payments to the country as its financial crisis deepens.
The peso was down 0.5% to 31.5 against the dollar after the announcement during a televised address. The currency has shed about 70% against the dollar this year and is the worst-performing emerging market currency of 2018.
The decision aims to “eliminate any uncertainty that was created before the worsening of the international outlook,” Macri said. It was not immediately clear how much the president had requested from the IMF.
In the largest bailout in IMF history, Argentina scored a $50 billion credit line from the institution earlier this year. As part of the three-year standby agreement, the government received the first $15 billion so far and was poised to get an additional $3 billion next month.
But the June deal has been slow to calm nerves about the country with an inflation rate of nearly 30%, soaring twin deficits, and a currency crisis.
The rating agency Moody’s on Tuesday cut its growth forecast for Argentina, estimating gross domestic product will contract by 1% next year, compared with previous expectations for a 3% expansion. The agency cited a ballooning debt burden and a weakening peso.
Further weakening of the Argentine peso will increase the burden of the country’s foreign-currency debt, the agency said. Total debt burden in the country is expected to reach 70% of gross domestic product next year, up from 50% in 2017.
An unfolding graft scandal in the country, which Moody’s has previously labeled credit negative for Argentine corporations, could also weigh on growth.
More than two dozen business and government officials, including a vice president, have been arrested in a case involving illegal payments for favors like public-works contracts that allegedly took place over a decade under President Cristina Fernandez de Kirchner.
The scandal came to light in early August, when Buenos Aires-based newspaper La Nacion published excerpts from the notebooks of a former driver in the Fernandez administration. The notebooks purportedly detailed how he transported roughly $160 million in bribe payments from construction companies to government officials from 2005 until 2015.
IMF economists and technicians are in meetings with government officials in Argentina to review parts of the new agreement, according to Bloomberg.