Argentina Seeking IMF Financing to Stabilize Economy

Argentina opened talks with the International Monetary Fund on Tuesday to seek a financial aid package, 17 years after the country defaulted on its debt and 12 years after cutting ties with the fund.

As a bout of market turbulence rocks Argentina's economy, President Mauricio Macri announced that “as a preventative measure, I have decided to begin discussions with the International Monetary Fund for them to grant us a line of credit,” AFP reported.

IMF chief Christine Lagarde said talks will begin soon on ways to shore up Argentina’s economy. She welcomed Macri’s statement, saying that “discussions have been initiated on how we can work together to strengthen the Argentine economy and these will be pursued in short order.”

After the country’s currency fell 4% compared to the US dollar, Macri said in a televised speech he had held his first conversation with Lagarde but did not say how big a line of credit Argentina is seeking.

“We are pursuing the only path open to us to emerge from stagnation, seeking to avoid a great economic crisis that will set us back and hurt everyone,” he said.

Economy Minister Nicolas Dujovne told reporters it was too soon to talk about the details and conditions “but we have agreed that the IMF will offer financial support to Argentina.”

But harking back to the bitter relations former governments had with the Washington-based lender, Dujovne said “we’re talking with an IMF that is very different than the one we knew 20 years ago.”

In January 2006, Argentina paid down its last loan to the IMF and severed relations with the fund, refusing even to allow the regular annual review of economic conditions conducted for all member countries for the next 10 years.

The loans at the time were needed after the country suffered an economic crisis in 2001 that sparked the downfall of four presidents and default on $100 billion in foreign debt.

But Argentines objected to the strict conditions imposed by the IMF in exchange for the loan.