By Jose Antonio Ocampo (*) – By affirming that Argentina's public-sector debt is unsustainable, the International Monetary Fund has taken a critical step toward resolving the country's long-running crisis. Moving forward, one hopes that the Fund will realize its own role in the latest crisis and follow its own advice on when to pursue capital-market liberalization.
Argentina agreed to start consultations with the International Monetary Fund that could lead to a new financing program, days after the global lender said the country’s debt situation had become “unsustainable”.
The International Monetary Fund, as the lender of last resort, won’t offer a haircut on its Argentina loan after Vice President Cristina Fernandez de Kirchner called on the institution to take a loss.
The Financial Times dedicated on Monday an editorial to Argentina and its current strategy to avoid again defaulting by pressing on the IMF, and later on sovereign bondholders, for a significant haircut in its national debt approaching 90% of GDP. However, FT points out that “debt talks are unlikely to succeed without a strategy for economic revival”
A challenging week for the administration of Argentine president Alberto Fernandez and his foreign debt strategy. IMF negotiators land in Buenos Aires this Wednesday for their first mission since Fernandez took office in December. Before agreeing to any changes in the terms, negotiators will want to see Fernandez’s blueprint for tackling more than US$ 320 billion in total debt and for rescuing an economy that’s forecast to shrink for a third straight year.
Argentina on Wednesday told the International Monetary Fund that Buenos Aires cannot continue servicing unsustainable debt, as the IMF encouraged it to enact efficient restructuring policies.
Pope Francis staged a surprise visit to admonish the International Monetary Fund chief and several finance ministers to help alleviate the debt burden of struggling countries, calling for “a new financial architecture” to ensure social justice.
President Alberto Fernandez said he has set a March 31 deadline to renegotiate Argentina’s rampant public debt and that a more “innovative” International Monetary Fund approves of the direction his government is taking.
The Argentine government announced that this week it will honor payments of some US$ 850 million, which correspond to two different sovereign bonds, one of them a century maturing bond issued in 2017 during the administration of ex-president Mauricio Macri.
The Peronist Felipe Solá, one of the candidates for minister of foreign affairs in the government of the president-elect of Argentina, Alberto Fernández, said Monday that the next administration, to renegotiate the debt, will not change its vision regarding Venezuela.