By Jorge Otaola and Daina Beth Solomon
BUENOS AIRES/WASHINGTON (Reuters) - Argentina's economy minister sounded upbeat on Wednesday about clinching a new deal with the International Monetary Fund after two days of talks in Washington, and said had sought U.S. support for securing approval from the IMF's board.
Economy Minister Nicolas Dujovne said he believed a deal to release early disbursements from a $50 billion standby loan agreement with the IMF could be put to its board by the end of the month, helping to shore up investor confidence in Latin America's third-largest economy.
Argentina has already received $15 billion from the credit line, which was agreed upon in June but has failed to clear up concerns about the country's ability to pay off its debt.
"I had a productive meeting," Dujovne said of his talks with IMF Managing Director Christine Lagarde and First Deputy Managing Director David Lipton. "I regard the progress we have made with enormous confidence and I am sure the reworking of the agreement will enable us to leave behind these days of anguish."
"We're looking at timeframes and many other questions in terms of which part of the program is precautionary," Dujovne said, adding that the Fund's board could vote on a revised deal before the end of the month.
Dujovne denied a report by local Argentine media outlet Infobae that Argentina was also in talks with the U.S. Treasury Department for a $5 billion to $10 billion credit line.
The news report sent Argentina's bond prices higher on Wednesday and helped Argentina's Merval <.MERV> stock index close 4 percent higher.
Dujovne said that while Argentine officials had not spoken about direct financing from the United States, he had spoken with U.S. Treasury Secretary Steven Mnuchin about backing Argentina's bid to win the IMF's approval for a new deal.
"The U.S. Treasury's support for Argentina manifests itself through the support it excercises as a shareholder in the International Monetary Fund," Dujovne said.
The United States controls 16.52 percent of votes in the IMF, the largest of any country by far.
On Tuesday, as fresh talks between Argentine officials and the IMF started, U.S. President Donald Trump spoke with Argentina's center-right President Mauricio Macri by phone and voiced support for his handling of Argentina's crisis.
Dujovne said he would return to Buenos Aires as planned on Wednesday while his team continues to hammer out the details for a new deal.
On the eve of the talks with the IMF this week, Macri's government announced ambitious new targets to balance next year's fiscal deficit, to be paid for with new taxes on exporters and steep spending cuts.
But markets remained skeptical, with the peso losing 5.25 percent of its value against the dollar in the first two days of the week, despite the central bank selling $458 million on the local spot market.
The bank has sold more than $14 billion of reserves this year, including $100 million on Wednesday even after the peso reversed its initial losses and began to climb.
"With IMF talks happening in the United States, it is a hopeful climate, at least in this moment," economist Gustavo Ber told Reuters.
But many in Argentina believe Macri's government lacks the political will to implement unpopular spending cuts that are expected to be part of a revamped IMF deal.
The austerity measures announced on Monday aim to eliminate the primary fiscal deficit next year, when Macri is expected to seek re-election. Previous targets announced after the country inked the IMF deal in June included a 1.3 percent of GDP primary fiscal deficit in 2019, with no deficit in 2020.
(Reporting by Jorge Otaola in Buenos Aires and Daina Beth Solomon in Washington, Additional Reporting By Scott Squires and Luc Cohen, Writing by Mitra Taj; Editing by Frances Kerry and Tom Brown)