Argentina government: IMF had wanted “100%” peso devaluation

Argentina government: IMF had wanted “100%” peso devaluation

BUENOS AIRES (Reuters) – Argentina’s government said on Thursday that major creditor the International Monetary Fund (IMF) had originally wanted a “100%” devaluation of the country’s embattled peso currency, before the two sides agreed to a correction of 18% made earlier this week.

The comments, made by a government spokeswoman after similar ones by Economy Minister Sergio Massa, underscore rising pressure on the peso, which was devalued and pegged at 350 per dollar on Monday, though trades nearer 800 in parallel markets.

The IMF did not immediately respond to a request for comment.

Amid talks to speed up payouts from the country’s $44 billion IMF program, there has been pressure to allow the official exchange rate to drop in the line with parallel rates, seen as a truer reflection of the currency’s value. That would really be a 50% devaluation, but mean the cost of dollars would double, or rise 100%.

“Finally, the agreement we reached, which will mean that next week we will have almost $8 billion in disbursements, closed near 20%,” Massa, also the ruling Peronist coalition’s presidential candidate, said late on Wednesday.

The IMF board is expected to meet next week to ratify the latest reviews of Argentina’s loan program, which would unlock disbursements the country badly needs to meet its obligations, with net foreign currency reserves seen in negative territory.

Inflation over 113% has stoked anger in the country amid a cost-of-living crisis, leading to a shock result in primary elections last week where a radical libertarian Javier Milei came in first place above the two mainstream political forces. General elections will be held in October.

On Thursday, presidential spokeswoman Gabriela Cerruti apologized to voters in a weekly press conference, after the Peronists came in third place in the primaries.

“There was a significant number of citizens who decided to express their anger, their frustration, their criticism, to express how they are having a bad time in their daily lives or how they see that the course of the country is wrong,” she said.

“We particularly apologize to them.”

Cerruti said the government would announce inflation-targeting price agreements on Thursday, offering tax benefits to firms that signed up, and in coming days a package of relief measures for informal workers, retirees and the poor.

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