By Luc Cohen and Rodrigo Campos
The peso lost 20 percent of its value against the U.S. dollar in the two days since Macri announced he had asked the International Monetary Fund to advance disbursements under a $50 billion financing deal, which raised alarms in markets about whether Argentina could fund its 2019 deficit.
Speaking to reporters on Thursday night, Treasury Minister Nicolas Dujovne said the government would announce a set of new economic measures on Monday, and would target a 2019 primary fiscal deficit below the 1.3 percent of gross domestic product agreed with the IMF.
The government needs to do whatever it takes to bring fiscal accounts back in order, said Bertrand Delgado, emerging markets strategist at Societe Generale in New York. "That's the way to bring back confidence to the markets," he said.
Macri's administration is expected to send its proposed 2019 budget to Congress next month. Austerity measures have been unpopular with many Argentines, who blame budget cuts imposed by the IMF for exacerbating the effects of a 2001-02 economic crisis that plunged millions into poverty.
Tens of thousands of people marched through downtown Buenos Aires on Thursday evening demanding higher budgets for public universities and higher salaries for university professors and staff. Protesters say salaries have been eroded by inflation that clocked in at an annual rate of 31.2 percent in July.
"In the context of the debate over the IMF's adjustment budget, we need to organize to change the economic path," said Vinesa Siley, a lawmaker in Argentina's lower house of Congress aligned with former populist President Cristina Fernandez.
Members of Fernandez's Citizens' Unity party called for Friday evening protests against Macri's government across the country. Macri's poll numbers have tanked as the economy slides into recession, posing a risk to his re-election prospects in next year's presidential race where he could face Fernandez.
That risk is also contributing to the peso weakness, said Dirk Willer, Citigroup's global head of emerging market strategy. "It is a reflection that the election could go 'wrong,'" Willer said. "Political uncertainty is being pulled forward in time."
(Reporting by Luc Cohen in Buenos Aires and Rodrigo Campos in New York; Editing by Leslie Adler)
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