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IMF mission arrives in Buenos Aires next Monday to continue negotiations

Friday, February 28th 2020 - 07:55 UTC
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Julie Kozack, the IMF deputy director for the Western Hemisphere, and Luis Cubeddu, head of the IMF’s mission in Argentina, will lead the team Julie Kozack, the IMF deputy director for the Western Hemisphere, and Luis Cubeddu, head of the IMF’s mission in Argentina, will lead the team
Discussions between the IMF and Argentina are going well, said Gerry Rice, earlier on Thursday Discussions between the IMF and Argentina are going well, said Gerry Rice, earlier on Thursday
Guzman said Argentina would initiate Article IV consultations that could pave the way for a new IMF program. However Kirchnerites are not convinced Guzman said Argentina would initiate Article IV consultations that could pave the way for a new IMF program. However Kirchnerites are not convinced

The International Monetary Fund will send another mission to Argentina to continue debt strategy talks and discuss “next steps,” IMF spokesman Gerry Rice said on Thursday, as the country seeks to renegotiate its US$ 57 billion financing package.

The IMF technical team will arrive in Buenos Aires on Monday for meetings with economy ministry officials about the government’s economic program, the spokesman said. The fund’s last mission to Argentina ended just over a week ago.

Julie Kozack, the IMF deputy director for the Western Hemisphere, and Luis Cubeddu, head of the IMF’s mission in Argentina, will lead the team, which is expected to stay until the end of next week.

“The meetings will also be an opportunity to continue to discuss next steps with the authorities,” Rice added.

Argentina, which has defaulted on debt obligations eight times, is facing tough negotiations with creditors and the IMF to restructure around US$ 100 billion in debt that the Argentine government says it cannot pay unless given time to revive stalled economic growth.

The IMF gave Argentina a US$ 57 billion standby financing agreement in 2018, but that program was agreed by the previous government and has been essentially on ice since the election. Argentina only withdrew some US$ 44 billion.

Discussions between the IMF and Argentina are going well, said Gerry Rice, earlier on Thursday. Argentine Economy Minister Martin Guzman and his team met with IMF staff in Washington on Monday, Rice said, following a meeting with IMF Managing Director Kristalina Georgieva in Riyadh during a meeting of G20 finance officials, where Guzman said Argentina would initiate Article IV consultations that could pave the way for a new IMF program.

“The discussions are going well and we expect that to continue in the coming days,” Rice told reporters at a regular IMF briefing, describing the current state of talks with Argentina’s new Peronist government as “very constructive.”

However the IMF Article IV consultations is not well seen in Argentina, particularly among the Kirchnerites who regard denying to open Argentine government books a milestone of their icon, ex president Nestor Kirchner, and whose widow recalls continuously.

The last IMF mission to Argentina ended on Feb. 19. At that time, the fund said Argentina’s debt situation was “unsustainable” and urged Buenos Aires to draft a definitive plan to restore debt sustainability, including a “meaningful contribution from private creditors.”

Fitch Ratings said on Thursday that Argentina needed significant debt relief to overcome its solvency and liquidity challenges, but said potential disagreements around the type and magnitude of debt relief needed, and how much fiscal tightening is realistic, could make it tough to reach consensus on a path forward by the end of March, as Argentine authorities intend.

Atradius, a global credit insurer, agreed the timetable was highly ambitious especially since the process was moving so slowly, and said the risk of a disorderly debt default remained high.

In a report, Atradius said the new administration faced a difficult balancing act between its campaign pledges promising no more austerity measures, and investor demands for a clear macroeconomic plan to improve long-term sustainability.

It warned that a disorderly default would undermine efforts to revive the economy and rebuild confidence, and could return Argentina to the “pariah status” it had in international capital markets between 2001 and 2014.

Top Comments

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  • Enrique Massot

    ”Atradius, a global credit insurer...said the risk of a disorderly debt default remained high (and) could return Argentina to the “pariah status” it had in international capital markets...”

    Atradius just forgot to say that ALL the parties -- not only Argentina -- have an interest in finding a realistic solution here. Such solution must take into account Argentina's responsibility but also that of the private lenders, who loaned money lured by high interest rates over real repayment likelihood and the IMF that lent the Macri government an unprecedented loan amounting to 60 per cent of its portfolio.

    Feb 28th, 2020 - 11:11 pm 0
  • Jack Bauer

    EM
    Seems that you Reekie, seem to forget that the private lenders, ”who loaned money lured by high interest rates (over real payment likelyhood)“ had every right to expect payment of principal, AND interest”, because it was Argentina that offered those rates. So blaming the lenders is only part of the story.
    OR, are you saying that Argentina accepted the loans with the intention of not honouring them ? If so, then previous administrations acted in the same way...no ?

    Mar 02nd, 2020 - 05:21 pm 0
  • DemonTree

    Eh, the high interest is offered as an incentive because investors know there is a higher risk of default. They pay their money and take a gamble, and must accept that sometimes they'll lose. If they wanted to play it safe they could buy US bonds with a lousy 1% interest.

    EM didn't say Argentina had no responsibility, just not sole responsibility.

    Mar 02nd, 2020 - 06:25 pm 0
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