MercoPress. South Atlantic News Agency

Argentina's goal of an IMF agreement by May, “is an ambitious timeline”

“I don’t see it as unviable, but clearly it’s an ambitious date,” IMF Western Hemisphere Director Alejandro Werner said during a virtual IMF press briefing

Argentina is planning to reach an agreement with the International Monetary Fund (IMF) on a new restructuring program by May, an ambitious timeline according to the IMF’s Western Hemisphere Director Alejandro Werner.

Argentina is negotiating a new program with the IMF to restructure payments of some US$ 44 billion the country owes the institution from a previous deal. Economy Minister Martin Guzman has repeatedly said he would find it “acceptable” to reach a deal by May, when Argentina has a separate debt payment scheduled with the Paris Club, a grouping of mostly western government creditors.

“I don’t see it as unviable, but clearly it’s an ambitious date,” Werner said during a virtual IMF press briefing. “The Argentine authorities are obviously working very hard on dealing with the need to be able to reach a deal by May.”

No substantial progress has been made between Argentina and the IMF in the six months since Minister Guzman sealed an agreement on Argentina’s debt restructuring with private creditors.

Werner’s comment also follows a remark last Friday by IMF Managing Director Kristalina Georgieva. “You know the saying in Argentina: ‘It takes two to tango,’ so both sides need to do our part and find a pathway to an agreement,” Georgieva said.

Investors see a gap between Argentina and the IMF over how fast the country will cut spending, especially amid this year’s mid-term elections. The government’s current primary fiscal deficit target for 2021 is 4.5% of GDP. But local economists and analysts anticipate that the IMF deal would actually include a primary fiscal deficit target of 3.5% of GDP.

Argentina’s IMF agreement is expected to establish a credible economic plan that will eventually help the country stabilize and return to financial markets after it defaulted last year. The surge in agriculture commodities is seen as a positive signal for the Argentine economy, but the country still has a long, bumpy, road ahead.

Argentina’s economy after almost a decade of stagnation has contracted for three straight years and now faces double-digit unemployment with inflation projected to reach 50% in 2021.