MercoPress. South Atlantic News Agency

Good negotiations between Argentina, IMF – but “dialogue will continue”

While dialogue continues, actual help would not be available in time for May's maturities

Argentina's Economy Minister Martín Guzmán and International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Tuesday met in Washington to discuss the renegotiation alternatives to the 2018 u$s 57 billion loans brokered by the administration of then-President Mauricio Macri.

 

Georgieva described the encounter as “very good.” She added that “our teams are working together constructively to help strengthen economic stability, protect the vulnerable and promote sustainable growth. Our close dialogue will continue.”

 

During the meeting, which took place in the afternoon at the Washington DC headquarters of the credit organization and lasted for about two hours, both parties analyzed possible extension of deadlines for the most imminent disbursements Argentina is supposed to make as well as additional grants on the part of the IMF, including special cash withdrawing allowances that would pump u$s 3,500 to the Argentine Central Bank.

Georgieva vowed to submit in June to the Fund's Board of Directors a proposal on an IMF capital increase of u$s 650,000 million in Special Drawing Rights (SDR), which is an IMF virtual currency. based on a basket of currencies. The issue has been discussed since last January and already has the approval of the G20 and the G7.

Guzmán for his part posted on Twitter: “Very productive meeting with the managing director of the IMF, @Kgeorgieva, in which the support for the economic principles on which the plans of our Government are based was deepened.” He went on: “We are working to finish turning the page occupied by the unsustainable indebtedness and failed policies of the 2015-2019 period, building conditions that strengthen the economic recovery and ensure lasting stability.” He reportedly showed Georgieva the fiscal results of the first two months of 2021, with the lowest financial deficit in the last six years, due to lower debt payments.

Minister Guzmán together with Argentine Ambassador to the United States Jorge Argüello and other lesser-rank officials had met Friday morning at the Argentine Embassy with an IMF negotiating team of Julie Kozack, IMF deputy director for the region, and Luis Cubeddu, in charge of the Argentine case.

Many market analysts believe that in view of the pandemic and the fiscal situation of many countries, especially the poorest, the IMF should speed up this extraordinary allocation of resources. If Georgieva's statement is anything to go by, the SDR issue will be subject to the ups and downs of political pressure among the strongest countries on the Board. In other words, those funds may not be available until July or perhaps quite past that date.

Despite the delay, Argentina, which holds 0,65% of the IMF capital, would receive u$s 4.3 billion but not quite in time for payments due in May to several creditors, including the Paris Club and private lenders under either domestic or foreign legislation.