On Wednesday, following weeks of uncertainty that saw the peso fall to an all-time low against the dollar, Argentine President Mauricio Macri declared the country’s currency crisis over after the peso and Argentine stocks and bonds all rebounded slightly.
The relief came after Argentina’s central bank refinanced $26 billion of debt and auctioned off $200 million of new debt. In addition, the Macri government announced it would seek $30 billion of financial support from the International Monetary Fund (IMF) and reduce its target for fiscal deficit from 3.2% to 2.7% of GDP.
It remains to be seen how President Macri’s flirtation with the IMF will play in a country with a tumultuous history with the financial institution. At the turn of the century, IMF-imposed controls on the Argentine economy following IMF assistance throughout the 1990s led to a massive financial crisis. Although it finally admitted wrongdoing in 2004, to this day many Argentines blame the IMF for the hardship of the early 2000s and view any interaction with the organization as ceding of sovereignty. Indeed, protests erupted mere hours after Macri announced his intention to enter into negotiations with the IMF.
It remains to be seen whether Argentina’s patience with Macri, who has enjoyed consistent popularity despite controversial economic reforms, is finally wearing thin.