MercoPress. South Atlantic News Agency

Argentine FM in Washington DC seeking support for new IMF deal

Argentina's Central Bank reserves are below US $ 4 billion, while maturities for all of 2022 add up to 19,000 million

Argentine Foreign Minister Santiago Cafiero is on a diplomatic mission to Washington DC where he is to hold meetings with US Secretary of State Anthony Blinken and with House Speaker Nancy Pelosi in a move aimed at gathering some support ahead of new negotiations with the International Monetary Fund (IMF).

Cafiero is to meet Tuesday with both Blinken and Pelosi as a part of the negotiations that the government of President Alberto Fernández has been carrying out with the IMF. The Argentine Government seeks more flexibility and the cancellation of maturities, so as to start payments in 2026 after having achieved a sustained growth.

Argentina's Central Bank reserves are below US $ 4 billion, while maturities for all of 2022 add up to 19,000 million, including one worth US $ 2,900 million in March.

The IMF objects to the postponements and demands a reduction in the fiscal deficit, which is around 3% of the Gross Domestic Product (GDP). The IMF has also voiced its concerns about the Government's ability to tackle a constant increase in prices.

“Addressing the persistent and high inflation requires a multiple approach that implies a reduction of the monetary financing of the fiscal deficit, an adequate monetary policy with positive real interest rates and a coordination of prices and wages,” said the IMF in its last report on Argentina, released in December.

President Fernández insists his administration is willing to pay but not at the price of an aggressive adjustment in public spending at a time when COVID-19 still calls for help towards the most vulnerable.

“That the Monetary Fund understands that we have to grow, that we have to fortify the internal situation and the economy of Argentina in order to later pay and be able to meet this debt, which our government did not contract, but which it is going to try to solve,” Presidential Spokeswoman Gabriela Cerrutti said last week.

Hence, Argentina needs the support of the US to bring positions closer to a new agreement, while Economy Minister Martín Guzmán is seeking the support of the opposition, which after being the ones who took the loans from the IMF are “lobbying against an agreement with the IMF,” according to Interior Minister Eduardo De Pedro.