MercoPress. South Atlantic News Agency

Argentina planning for a new program agreement with the IMF by end of March

President Fernandez is turning his attention toward the IMF as the country looks to reschedule over US$ 44 billion in loans with its senior creditor

Argentina aims to reach a deal with the International Monetary Fund over a new financing program before the end of March, a time frame that Fund veterans say is realistic if both sides show commitment. The news was reported by the economic media from Buenos Aires.

The government, which sealed an initial US$ 65 billion debt agreement with its private creditors on Tuesday, will look to begin formal negotiations with the Fund after Sept. 4, which is the date in which the deal with bondholders will settle.

Argentina's goal is to have a new program before the end of the first quarter of 2021, so that it has enough time to renegotiate a US$ 2 billion payment owed to the Paris Club and maturing in May. The Paris Club is an informal grouping of 22 country lenders.

With the private debt renegotiation almost complete, President Alberto Fernandez is turning his attention toward the IMF as the country looks to reschedule over US$ 44 billion in loans with its senior creditor and replace the stand-by credit line signed by the previous administration in 2018. Argentina may request to start the talks, a formal step necessary to kick off the negotiations, as early as this month said the local media.

“Whether negotiations have ‘begun’ or not, the Fund and Argentina are talking all the time,” said Mark Sobel, a former U.S. representative at the IMF now at the Official Monetary and Financial Institutions Forum think tank. “March is a long, long way from here. If both parties are willing to do their parts, then a program by March is easily reachable, if not far, far sooner.”

Still, government officials have publicly said they will take their time.

“There is no rush to start negotiations with the IMF,” said Argentina’s cabinet chief Santiago Cafiero in an interview with local TV Publica station late Wednesday. The Fund “has been frank in its understanding of the limits of Argentina’s socioeconomic limits; we hope that will continue.”

The IMF stands ready to support Argentina, including engaging with the authorities on a new program when they desire it, but at this stage no request has been made, a spokesman for the Fund said.

One of the principles of the Paris Club is that it only considers negotiating its loans with countries that have a current facility with the Washington organization, according to its website. Argentina was supposed to make the US$ 2 billion capital and interest payment in May, but requested to postpone it by a year.

The country’s principal repayments to the Fund don’t begin until the third quarter of next year. It remains to be seen if Argentina will seek to roll over its existing debt into a new version of the same stand-by deal or into a longer-term program that requires more reforms, called an extended fund facility.

Argentina canceled the previous standby-arrangement with the Fund, and would seek a new “very distinct” agreement, Economy Minister Martin Guzman anticipated on Tuesday after the creditor deal was announced.

IMF Managing Director Kristalina Georgieva praised the deal in a tweet that day, calling it a “significant step.”