The International Monetary Fund on May 14 said it would meet later in the week to discuss a potential credit lifeline to Argentina as the South American country's currency hit a new record low against the U.S. dollar.
"IMF staff are continuing discussions with the Argentine authorities toward a fund-supported program. Our shared goal is to reach a rapid conclusion of these discussions," an IMF spokesman said, noting that the body's board will meet May 18 to discuss Argentina during an informal meeting.
Argentina earlier in May went to the IMF for financial support in an effort to stave off a full-fledged crisis after three consecutive interest rate hikes failed to halt a slide in the peso. Argentine Treasury Minister Nicolás Dujovne has requested a "high access" standby arrangement, a credit line aimed in part to "support policies designed to help them emerge from crisis and restore sustainable growth," according to the IMF.
In a statement earlier in May, IMF managing director Christine Lagarde said she instructed the IMF to continue discussions "toward a fund-supported program," adding that both she and Dujovne "agreed that our shared goal is to reach a rapid conclusion of these discussions."
The IMF said it will not set any exchange-rate targets in its planned financing package.
The value of the Argentine peso has continued to slide over the course of 2018, despite recent attempts by the country's central bank to put a floor under the currency. The peso was down more than 8% against the U.S. dollar on May 14, trading at 24.99 pesos to US$1, after the country's central bank offered $5 billion at 25 pesos per U.S. dollar at the start of trading.
The peso has now lost more than a quarter of its value against the dollar so far this year, even after Banco Central de la República Argentina raised its benchmark rate to a multiyear high 40% earlier in May and spent about 10% of its foreign reserves in April to prop up the currency.
Following those moves, economists at Capital Economics said they now expect Argentina's economy to contract by 0.5% in 2018, having previously forecast 2.5% growth; they also lowered their 2019 growth forecast to 1.5% from 3.2%.
"At this stage ... deal or no deal [from the IMF], the economy looks set for an abrupt slowdown," they wrote in a May 10 report.
