An IMF team, led by Julie Kozack Deputy Director of the Western Hemisphere Department and Luis Cubeddu Mission chief for Argentina, visited Buenos Aires from February 12 to 19, 2020 to discuss the recent macroeconomic developments and learn more about the Argentine authorities’ economic plans and policies. At the conclusion of the staff visit, Ms Kozack and Mr Cubeddu issued the following statement:
“IMF staff had very productive meetings with the Argentine authorities on their macroeconomic plans and policies, the contours of which were reiterated by Economy Minister Martin Guzmán in his address in the Argentine Congress last week. We share the authorities’ overall objective to restore growth and reduce poverty, while also achieving an improvement in the fiscal and external balances.
“The Argentine authorities are moving to address the difficult economic and social situation facing the country. They have implemented a set of policies to address the rise in poverty, while also taking steps to stabilize the economy. Higher taxes are being used to in part finance increased social spending, most of which is targeted towards the most vulnerable. Supported by capital controls and a trade surplus, international reserves and the peso have stabilized. Inflation and inflation expectations have come down in recent months, but efforts are needed to reduce them further from current high levels. The authorities are also taking steps to secure a sustainable and orderly resolution of Argentina’s debt situation.
“Argentina’s debt and debt service capacity have deteriorated decidedly compared to the IMF’s last Debt Sustainability Analysis (DSA) published in July 2019, in the context of the Fourth Review under the Stand-By Arrangement (SBA). On that occasion, the overall assessment was that Argentina’s public debt was sustainable, but not with high probability, given substantial downside risks, including: (i) heightened rollover risk due to the shorter maturities on new issuances; (ii) vulnerability of the debt trajectory to exchange rate movements, given the large share of foreign currency public debt; and (iii) large external financing needs, which is often a predictor of crisis in emerging economies.
“IMF staff notes that, subsequently, those risks to debt sustainability have materialized. In fact, since July 2019, the peso has depreciated by over 40 percent, sovereign spreads have increased by about 1100 basis points, international reserves have declined by about US$20 billion, and real GDP has contracted more than previously projected. As a result, gross public debt rose to nearly 90 percent of GDP at end-2019, 13 percentage points higher than the projection at the time of the Fourth Review. In addition, with the realization of the identified financing risks, since August 2019 the authorities have introduced capital flow management measures, imposed maturity extensions on certain debts, and resorted to central bank financing of the fiscal deficit.
“In light of these developments, and on the basis of the July 2019 DSA, IMF staff now assesses Argentina’s debt to be unsustainable. Specifically, staff is of the view that the primary surplus that would be needed to reduce public debt and gross financing needs to levels consistent with manageable rollover risk and satisfactory potential growth is not economically nor politically feasible. Accordingly, a definitive debt operation—yielding a meaningful contribution from private creditors—is required to help restore debt sustainability with high probability. IMF staff emphasized the importance of continuing a collaborative process of engagement with private creditors to maximize their participation in the debt operation.
“IMF staff and the authorities will continue to engage closely, and further discussions are planned as the authorities advance in defining their economic plans and policies. In the context of the upcoming G20 Finance Ministers meeting, IMF Managing Director Kristalina Georgieva will meet with Economy Minister Martin Guzmán to discuss the next steps in the IMF’s engagement with Argentina.”
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Sad fact of the matter Think, is that as predicted, Argentina is unable to pay their IMF debt.Feb 20th, 2020 - 10:22 am +2
Further that tens of thousands of people are living in poverty with that number set to rise.
Argentina is at rock bottom right now and it shows with their renewed aggression towards us.
A repeat of 1982 when their corrupt government tried to divert the internal problems away by invading us.
This time though Argentina is so financially weak that they no longer have a strong force capable of attempting a similar diversion from their internal issues.
There is a real solution to this problem within Argentina but it will require you to do what you keep vowing you will never do.
Drop the stupid claim to sovereignty and start embracing the neighbours that surround you.
Trade will begin to increase and with it the much needed funding that is required to lift Argentina out of this current irreversible debt situation.
But we all know that will never happen because indoctrinated Argentines do not care about their people or their neighbours.
A tiny Country who you fail to recognise has one of the best sustainable growth patterns and lessons within Argentina could and should be learned from our success.
Karma has a strange way of revenge and right now Argentina is in its grip.
Sad man you are Think.Feb 20th, 2020 - 12:26 pm +2
If you were to stop being so bitter and started to embrace everything around you Argentina would not be in this financial crisis.
For your information I stole nothing and most certainly do not squat on our land.
Cant say the same for most Argentines who history records stole the very land you call Argentina.
That is where we differ. Our ancestors came here of a free choice. Not great Britains but a people of mixed race including Argentines and many others from your neighbouring Countrues.
If you look at our history you will see that the spanish south Americans attempted to colonise what was already a British land in the late 1820's. Eventually and rightfully those squatters of military origin were removed but what you and you countrymen fail to acknowledge was that the entire civilian population at that time were offered to stay and most accepted the offer and we are living proof today of that fact.
There are islanders settled here by birth right many ancestors were from what we call today Argentina and they have integrated with other migrants throughout our history.
So you are totally wrong on saying we are squatters. We are the indigenous people of the land but of course your mindset is such that you cannot accept that you are the progeny of a people that butchered an indigenous people to acquire the land you live on.
No one was butchered here on the Falkland Islands.
Your real problem is total jealousy of the fact that in spite of everything Argentina has tried to do towards us has failed and we have grown stronger and financially better of then we were before that aggressive bully from your country invaded us.
Reality is that conflict actually put us on the map because more people in the world now know that we do exist and trade with us despite Argentinas efforts to try otherwise.
It hurts you even more to know that we are very succesful at everything we do while Argentina has by and large failed it's people.
Let me add that I belong to the extremenly large group of argentine people who belive that the islandres ARE NOT SQUATTERS, they are just honorable people making thier lives in the islands.Feb 20th, 2020 - 03:03 pm +2
Saying that the kelpers are squatters is a useless lack of respect to those who were born in the Islands. The idea that the islanders are squatters belongs to some argentine fascists. Not even, peronists politician dare to call the islanders squatters in the mass media because they know they would be rejected by the majority of the argentine people.