BUENOS AIRES—Argentina turned to the International Monetary Fund for financial backing to help stem the peso’s depreciation and rising discontent over high inflation and reduced government spending.
In a televised address on Tuesday, President Mauricio Macri said the move is aimed at avoiding a crisis like those that Argentina suffered in the past. It will be the IMF’s first financial support package for the country since 2003.
Argentina has had a rocky relationship with the IMF since the country defaulted on its foreign debt in 2001, sparking a yearslong period of financial isolation.
Some said the credit line sends a bad message by showing that the government needs outside help to address its economic troubles, and could add to the country’s ballooning debt.
“It is not good for the future of Argentina,” said Guillermo Nielsen, a former Argentine finance minister who led the country’s debt restructuring with the IMF at the turn of the century. “Argentina went back into heavy indebtedness under Mr. Macri” and now debt-servicing payments will rise, he added.
Mr. Macri faces a growing backlash among Argentines upset with rising living costs, while opposition lawmakers are looking to halt an increase in utility prices that have hurt small business owners. In April, public support for Mr. Macri fell to 46% from 66% in October, according to a poll conducted by the University of San Andrés, a decline that risks worsening with the IMF deal.
“We know what happens when the IMF enters our country,” said opposition lawmaker Leonardo Grosso. “The popular movements, unions and every Argentine with a memory should be in the street resisting this policy that is only going to bring hunger, unemployment and misery.”
Finance Minister Nicolás Dujovne was scheduled to travel to Washington on Tuesday to meet with IMF officials. He said the government was looking to ensure stability while supporting economic growth.
“Discussions have be initiated on how we can work together to strengthen the Argentine economy and these will be pursued in short order,” the IMF said.
Mr. Macri, who took office in 2015, cited complicated global conditions, including rising interest rates and oil prices, and the depreciation of emerging-market currencies, “among other variables that we don’t manage.”
“The problem we have is that we’re one of the countries in the world that most depends on external financing, the result of the enormous public spending that we inherited and which we are putting in order,” he said.
The talks come after the Argentine central bank raised interest rates three times in a week—after lowering them at the start of the yearin an attempt to stimulate growth—and sold $5 billion in reserves in an effort to prop up the peso.
The peso continued sliding early Tuesday, falling to around 23.25 pesos to the dollar before recovering some ground after the announcement.
The efforts to halt the depreciation of the currency come amid investor concerns about the central bank’s independence and government’s ability to contain inflation, which is currently above 25%. The central bank’s target for this year is 15%.
“It’s going to be a long tough road to regain and fully restore policy credibility much of which was unnecessarily damaged,” said Patrick Esteruelas, head of research at Emso Asset Management.
Argentine equities have dropped 14% this month, and the Argentine peso has weakened 12% against the dollar since the government began intervening in currency markets in late April.
The country has a history of fiscal mismanagement, government debt defaults and currency depreciation. The new administration under Mr. Macri has worked hard to win back foreign investors and to encourage bank lending with more pro-business policies.
Argentina’s star was rising last year as investors poured into a country that was re-entering global financial markets for the first time in 15 years following the massive default. Argentina’s equities surged 77% and at a time of low and negative interest rates globally, many investors eagerly took on risk in exchange for higher yields. The government sold $2.75 billion of bonds with a 100-year maturity at a yield of 7.9%. It was the first junk-rated country ever to sell so-called century bonds.
In a December report, the IMF praised measures taken by the Macri administration to turn around the Argentine economy, “including efforts to rebuild institutions and restore integrity, transparency, and efficiency in government,” but added that “important challenges remain and further efforts are needed.”
But many economists are increasingly concerned with Argentina’s growing debt to cover its widening budget gap, resulting in rising interest payments.
Argentina’s external debt has grown from $178.9 billion in 2015 to a projected $252.9 billion in 2018, according to the IMF or 39% of GDP. With much of that debt denominated in dollars, Argentina’s weakening currency will make it more difficult for Argentina to pay that debt back.
The IMF credit line is also unlikely to calm markets unless a deal with the IMF includes conditions to tighten fiscal policy, said Claudio Irigoyen, an Argentine economist with the Bank of America Merrill Lynch.
“If that is not the case, the market will see this as the IMF just financing the capital outflows from Argentina,” he said.
—Santiago Pérez contributed to this article.
Write to Ryan Dube at email@example.com and Julie Wernau at Julie.Wernau@wsj.com