MercoPress. South Atlantic News Agency

Argentina ready to formally join the IMF fold; Prat-Gay to meet Lagarde this week

Prat-Gay will attend the IMF-World Bank summit in Washington DC and is expected to discuss the issue with IMF head Christine Lagarde.

Argentina will start discussions with the International Monetary Fund (IMF) this week on its first Article IV review in a decade, Finance Minister Alfonso Prat Gay said at a conference held by the Institute of International Finance (IIF) in Nassau. “Next week we are going to have a discussion (with the IMF) to agree on an actual schedule for the next Article IV evaluation, which will happen sometime around September,” Prat Gay told the audience on Sunday.

The Finance Minister will attend the IMF-World Bank summit in Washington DC and is expected to discuss the issue with IMF head Christine Lagarde. Argentina is one of only seven countries that have delayed the completion of the review for over 18 months. Its last one was in July 2006.

Under Article IV of the IMF’s charter, members face regular inspections in which officials from the Washington-based fund speak to lawmakers, business leaders and unions to make recommendations about the country’s economic outlook.

The Cristina Fernández administration had an antagonistic relationship with the Fund, often disputing its forecasts for Argentine economic growth and blaming it in part for the economic crisis following its 2001 default.

“We have no problem with people looking at what we do because we are very confident in what we are doing,” said Prat Gay, stressing that Argentina has already started a broad revamp of its national statistics agency. “People got to the point where they gave up on statistics, they took them as cheating,” he said.

The country is also discussing a pipeline of old and new programs with the Inter-American Development Bank (IDB), which is hosting its annual meeting in the Bahamas this week. Those programs are expected to have a significant implication on the balance of payments of Argentina, which has so far contributed more money to the multilateral institution than it has taken out, Prat Gay said.

On the domestic front, Prat Gay said Argentina’s economy should begin to grow in the second half of the year and into 2017. The minister added the government aims to eliminate the primary fiscal deficit and cut inflation to around 5%, from over 30% this year by the end of its term in 2019. A strong economy should boost support for the administration of President Mauricio Macri, whose party still remains in the minority in Congress.

Despite Prat-Gay’s forecast, the UN Economic Commission for Latin America and the Caribbean (ECLAC) said on Friday Argentina will drop 0.8%, following a 0.6% decline in the region.

“It is very important for us to gain more seats in Congress, so then we will have enough firepower for pending structural reforms,” said Prat Gay.

The government has had to rely on significant support from the opposition to pass key laws to allow Argentina to settle its 15-year long dispute with litigant creditors. A new multi-billion bond sale expected to come to market as early as April 18 could finally put the legal fight to rest and allow Argentina to also emerge from its 2014 default.

Argentina is looking to raise at least US$12 billion — enough to cure its 2014 default and resume payments on restructured bonds. But it could push the sale to US$15 billion, depending on the pricing level. Argentina has already received more than 140 requests for a meeting from investors as part of a week-long road-show in London and the US that starts this Monday.