MercoPress. South Atlantic News Agency

US expects Argentina to uphold its commitments to IMF, Mnuchin said

“They have a commitment to the IMF. Our expectation is that this government upholds that commitment...” said US Treasury Secretary Steven Mnuchin

The United States expects Argentina’s incoming Peronist government to uphold the country’s commitment to the terms of its US$ 57 billion International Monetary Fund loan program, U.S. Treasury Secretary Steven Mnuchin said.

In an interview with Reuters in Saudi Arabia, Mnuchin did not rule out a renegotiation of the program, but said any such request for changes would have to be considered by the IMF as part of Argentina’s economic plan.

With the United States controlling 16.5% of the IMF’s voting power, the Treasury chief controls an effective U.S. veto over major IMF decisions.

Public anger over fiscal austerity measures mandated by the IMF program was a key factor in Sunday’s election of Peronist candidate Alberto Fernandez, who ousted market-friendly President Mauricio Macri.

Fernandez said repeatedly during his campaign that he would renegotiate the IMF program, and had suggested extending the maturity of the debt to reduce payments.

Argentina's financial markets remain in limbo over the direction in which Fernandez will take Latin America’s third-largest economy, which is saddled by around US$ 100 billion in external debt and trying to avoid default.

“They have a commitment to the IMF. Our expectation is that this government upholds that commitment and if they ask for changes, like any other country, the IMF will look at their request as part of what their economic plan is,” Mnuchin said on the sidelines of a conference in Riyadh.

“We want to see the people of Argentina, and the economy, succeed. Our interests are to support the people,” Mnuchin added.

Mnuchin signed off on an initial US$ 50 billion Argentina program in June 2018, along with an expansion to US$ 57 billion three months later. It is by far the largest bailout in the IMF’s 75-year history, with about US$ 43 billion already disbursed.

He said it was too soon for the United States to weigh in on any decision by the IMF as to how to proceed with Argentina.

The IMF has said that is ready to work with Argentina to make the program viable and help put the country back on a path to economic growth.