MercoPress. South Atlantic News Agency

Argentine keeps negotiating with IMF despite rejection to cutting down surcharges

Argentina continues to be the IMF's largest debtor.

The International Monetary Fund (IMF) has turned down a request from the Argentine Government to discuss a reduction in surcharges, it was announced Monday.

 The decision by the IMF's board of directors came as a setback for the administration of President Alberto Fernández, although Casa Rosada undisclosed sources quoted by Infobae were confident this decision would be reviewed before the end of the year.

The so-called surcharges are commissions charged to countries which borrow over the quota due to them as members of the organization.

Argentina continues to be the IMF's largest debtor. The Fernández administration has proposed that countries be exempted from surcharges amid the financial and economic burden of the pandemic. But other member countries saw no reason to explore the idea.

Economy Minister Martín Guzmán and IMF Managing Director Kristalina Georgieva are scheduled to meet Tuesday in Washington.

Argentina has agreed to a three-year stand-by program with the IMF which included access to financing US $ 56,000 million, of which the country used about US $ 45,000 million. Argentina has already paid a maturity of US $ 1.9 billion and a second one in the same amount is due in December.

During 2022, the Argentine Government needs to postpone payments which amount to around US $ 19 billion. The IMF charges a rate of 200 basis points, or 2 percentage points, on outstanding loans that exceed 187.5% of a country's quota, which increases to 300 basis points if a loan continues to exceed that percentage after three years.

Argentina's request was supported by a proposal from Guzmán's mentor Joseph Stiglitz and his colleague Kevin Gallagher to agree on a new policy for the collection of surcharges.

The IMF is also going through a storm among its own ranks, since the future of Georgieva, who is under probe for for allegedly maneuvering in China's favor during her time at the World Bank, is to be decided.

Guzmán is currently in Washington DC alongside Central Bank CEO Miguel Pesce for talks with an IMF team headed by Julie Kozack, deputy director of the Western Hemisphere Department. A meeting with Georgieva is also scheduled.