Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Argentina Pleads for IMF Loans

FORTALEZA, Brazil -- Argentina has pleaded for renewed international financial help to overcome its deep economic crisis, warning of more social and political upheaval if rescue loans are not forthcoming.

"To overcome the crisis sooner, we need the support of the international community, not just with words but with loans and funds," Argentine Economics Minister Jorge Remes Lenicov said Sunday.

Otherwise the crisis will deepen and the government may not survive until September elections, Remes Lenicov told international investors and finance officials from across the hemisphere at the annual meeting of the Inter-American Development Bank.

"It is continuity or anarchy. That is the risk we see," Deputy Economics Minister Jorge Todesca told reporters.

Finance ministers from other Latin American nations, keen to avoid financial turbulence spreading to their economies, backed Argentina's urgent call for assistance from the International Monetary Fund and other lending agencies.

The IMF last week reopened negotiations with Argentina, whose new government has floated the peso currency and begun to lift controls imposed last year to avoid a run on the banks.

Remes Lenicov and Todesca met with U.S. Treasury Undersecretary for International Affairs John Taylor, who praised the changes Argentina's financial authorities are making.

"We had a good set of meetings and exchanged information about a number of things," Taylor told reporters. "There certainly have been a lot of talks and a lot of good discussions with the IMF, and the [Argentine] Central Bank is making good changes," he added.

Executives of private international banks facing major losses in Argentina said they felt encouraged after hearing Remes Lenicov lay out his game plan for economic recovery.

But the bankers said they were far from knowing whether Argentina will be viable enough for them to continue operating in the country, where their assets were hit by devaluation.

"Things are going in the right direction, but we are still a long way from knowing whether the system is viable or not and whether it is feasible to continue operating there," said an source at a European bank with exposure in Argentina.

The source said a lot will hinge on agreement with the IMF on an economic program that will unblock $9 billion remaining from a rescue package granted to Argentina last year. That program was suspended in November because of Argentina's failure to control spending and reduce its fiscal deficit.

In December, Argentina declared default on its $141 billion public debt amid banking restrictions that angered the public and set off protests that ousted two presidents in two weeks.

Argentina's economic output will shrink dramatically in the first half of this year, but return to growth in the last two quarters, Todesca forecast.

"In February we will hit the bottom of the crisis," he said, estimating that gross domestic product will contract 8 percent in the first quarter and 7 percent in the second compared to the same quarters last year.

But the economy will expand 1 percent in the third quarter and 4 percent in the fourth, he predicted.

"It is clear that Argentina deserves and should get international help," Brazilian Foreign Minister Celso Lafer said. "This is Brazil's view, and we are transmitting this to other governments," he said after attending a conference on the Argentine crisis, the main issue at the IADB meeting.