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BUENOS AIRES - Argentine President Mauricio Macri on Wednesday unveiled a package of welfare subsidies and tax cuts for lower-income workers to lessen the impact of an economic crisis just months before a re-election bid, but his announcement did not halt the peso currency's collapse.

Amid signs that Argentines are already cutting back on buying goods due to a currency crash this week, the peso closed 7.1% weaker on Wednesday to reach 60.2 per U.S. dollar.

The peso has lost a quarter of its value since Monday due mostly to market concerns that opposition candidate Alberto Fernandez will bring back interventionist economic policies if he wins October's presidential election as looks likely.

Argentina is currently suffering a recession and an inflation rate of 55%. Macri said he would raise the minimum wage, temporarily freeze gasoline prices and increase the income tax bracket floor by 20%.

That would allow a tax cut for two million workers worth some 2,000 pesos ($33) per month per person, the government said.

Argentina's President Mauricio Macri looks on during a news conference after the presidential primaries, in Buenos Aires, Argentina, Aug. 12, 2019.

Better known for austerity measures earlier in his time in office, Macri said the government will now give subsidy payments of 1,000 pesos per child for unemployed people with children before the end of the year. The minimum wage increase will be determined later.

Macri, a member of one of Argentina's wealthiest families, came to power in 2015 on promises to kick-start Latin America's third-largest economy via a liberalization wave but inflation is at 55%, the country is in recession.

Fernandez warning

Fernandez, whose victory in primary elections on Sunday was seen as the most immediate catalyst for the peso crash, warned that Argentina could run out of foreign currency reserves.

"Because of the seriousness of the situation, the risk is that we end up without reserves and that the Fund ends up turning its back on us," the presidential candidate told El Destape Radio, referring to Argentina's $57 billion standby agreement with the International Monetary Fund.

Macri said on Twitter he had carried out a "good and long" conversation with center-left rival Fernandez, who had expressed willingness to keep markets calm in case of an eventual handover of power.

The peso was already struggling but it went into a nose dive after Fernandez heavily defeated Macri at the primary elections.

Markets fear a Fernandez government would bring back previous interventionist economic policies that have already been tried and found wanting in a country with a long recent history of economic crises.

FILE - Presidential candidate Alberto Fernandez speaks during the primary elections, at a cultural center in Buenos Aires, Argentina, Aug. 11, 2019.

Macri plan

"The measures I take and that I am going to share with you now are because I listened to you," Macri said in a video statement announcing his new measures.

He said gasoline prices would be frozen for 90 days as part of his plan. The new measures will cost the government about $678 million, the government said.

"These are measures that will bring relief to 17 million workers and their families," Macri said.

Macri's previous austere public spending policies were liked by the bond market but they have proven disastrous for his popularity among middle- and low-income Argentines struggling to pay electricity and heating gas bills that surged after the administration cut subsidies.

Sales of goods from cars to food and beauty products have slowed in recent days, as suppliers hold back shipments while trying to calculate how the weaker peso will affect consumer prices.

Citizens' reaction

The new economic measures was seen as too little, too late in the eyes of some Argentines.

Brenda Scala, 25, said the 2,000-peso estimated savings through Macri's new cuts would barely cover the cost of an electricity bill.

"It's almost nothing. The truth is people are struggling to get to the end of the month. And the gas price freeze — it took four years? Two thousand pesos is not enough to win votes," Scala said.

For Adrian Lopez, a 47-year-old office manager, the relief plan could represent an opportunity for Macri to win back some support among undecided voters.

"He should have done these measures before, but I think there are a lot of people who decide their vote at the last- minute, and well, we are in the last minute now," Lopez said.

The meltdown in Argentina's currency, stocks and bonds on Monday was the worst since the South American country's 2001 economic crisis and debt default.

The peso hit an all-time low Monday of 65 to the dollar, a drop of 30% before recovering partially.

Brazilian President Jair Bolsonaro said on Wednesday that Argentina was heading for chaos as "leftist bandits" who performed well in the primary election will follow the path of Venezuela, which is mired in a deep economic crisis.

Argentina's Merval stock index was down 34.47% since the start of the week.

Reserves

In a sign that the market is more wary of holding Argentine debt, 5-year credit default swaps (CDS) were marked at 2,720 basis points, over double Friday's closing level of 1,017, according to data from IHS Markit.

Macri's best hope of retaining the presidency is to reach a second round of voting after October's general election, but investors see that as a long shot, said Ilya Gofshteyn, New York-based senior emerging markets strategist at Standard Chartered Bank.

A candidate needs at least 45% of the vote, or 40% and a difference of 10 percentage points over the second-place runner, in order to win the presidency outright.

"The Macri administration underestimated the extent of the economic hardship facing Argentine voters," Gofshteyn said.

Argentina's central bank sold $248 million from its reserves to try to steady the peso by Wednesday afternoon, bringing its total sales in reserve dollars to $503 million this week.

The bank has about $66 billion in reserves, of which about $20 billion are free resources that it can use to pay debt and stabilize the peso, according to an Argentine government official.

Debt payments for the remainder of 2019 are estimated between $5 billion to $10 billion, depending on Argentina's ability to roll over domestic Treasury bills, leaving the rest potentially to be used to intervene in the foreign exchange market.

There is about $27 billion in maturities in 2020, according to government data.