Argentine President Mauricio Macri said on Wednesday that the International Monetary Fund agreed to accelerate funds to support his government's austerity program, but his comments did little to calm the market, as the country's currency received renewed pressure.
The development came amid greater volatility in Argentina's financial and exchange markets, which have been hit by uncertainty about inflation, an economic slowdown and budget deficits.
Macri sought to calm the turbulence in a statement before the markets opened, assuring the Argentines that aid is on the way.
"During the last week, we have had new expressions of lack of confidence in the markets, especially about our ability to obtain financing for 2019," acknowledged Macri.
He said the IMF would provide "all the funds necessary to guarantee compliance with the financial program next year."
That would imply accelerating the disbursement of a pending loan of $ 50 billion that the IMF agreed to extend to Argentina in June after a run of the peso.
In return, the government has pledged to reduce its budget deficit to 2.7 percent this year, from 3.9 percent in 2017 and to 1.3 percent of GDP next year.
But the Argentine peso continued its decline shortly after, falling 6.99 percent until Wednesday to fall to 34.48 per dollar at the close.
"The announcement was vague and was made by the president, who has its risks," said analyst Lorenzo Sigaut of consultancy Ecolatina, who said it would have been more convincing if the economy minister had made the announcement.
He said that general doubts about an Argentine default on the loan had been mitigated "only until Macri's term ends (in December of next year) but from 2020, they remain dormant".
"The dollarization of assets is fueled internally by the distrust of the Argentine peso, because the government has promised a lot about the economy but has not complied," said Sigaut.
Part of the $ 50 billion loan will be allocated to support the budget, and the rest for the country's central bank to prop up the peso over a three-year period.
The first tranche of $ 15 billion has already been launched.
Economist Matias Carugati said there was a lack of government information to calm the markets.
"We know that the IMF is advancing money to cover us next year, but how long will it advance us and under what conditions?" I ask.
However, he maintained that "the risk of default is exaggerated".
"Argentina does not have a solvency problem, but rather a short-term liquidity problem, it is urgent to achieve financial calm and then see how to repair the damage."
It is projected that inflation in Argentina will exceed 30 percent by the end of the year, and the peso has plummeted in value by more than 40 percent since the beginning of 2018.
The economy contracted 6.7 percent in June, the third consecutive month of negative growth, and the annual growth rate was 0.6 percent negative.