President Alberto Fernández said Friday he was hoping to renegotiate Argentina's debt with the International Monetary Fund (IMF) "as quickly as possible" after “constructive” talks with the multilateral lender’s managing director in Rome.
Fernández told reporters that his meeting with IMF chief Kristalina Georgieva at the Sofitel hotel in Villa Borghese had been "very constructive" and "very frank.” Both parties “expressed our will to resolve the problem of Argentine debt," he added.
It was the first in-person encounter between the Argentine president and the Bulgarian economist, rounding off a week-long European tour by the Frente de Todos leader.
Members of the Argentine delegation said Friday they were “optimistic” and satisfied with the outcome of the trip, during which Fernández met with presidents and prime ministers in Portugal, Spain, France and Italy.
The Peronist leader concluded his visit Friday with high-level meetings with Georgieva and former US Secretary of State John Kerry, now Special Presidential Envoy for Climate Change.
A day earlier, Fernández had spent time with Pope Francis, discussing the coronavirus pandemic, poverty and Argentina’s debt woes.
Addressing plans to renegotiate Argentina’s multi-billion-dollar debt with the IMF, with repayments due this year in September and November, Fernández said he wanted to seal a deal with the Fund “as quickly as possible," though he warned “we cannot think about an agreement which demands more efforts from the Argentine people."
The country, which is currently in the grip of a three-year recession, is due to repay almost all of the close to US$45 billion it owes the IMF in the next three years. The government says that is “unpayable” without Argentina’s return to growth and stability. The economy contracted by 9.9 percent last year amid the coronavirus pandemic.
The president praised Georgieva on Friday, saying she was “very receptive” to his ideas and “very aware of the situation” in Argentina.
“The rest is a matter of negotiation," he told reporters in the lobby of a hotel in Rome. “I am optimistic, I never lose my optimism,” he added.
Fernández said he would speak with German Chancellor Angela Merkel via videoconference next week.
For her part, Georgieva said it was a "very positive meeting" where they discussed the "deep social and economic challenges" facing Argentina that have been aggravated by the pandemic.
”It was a true pleasure to finally meet President Fernández face-to-face, which highlighted the benefits of in-person dialogue,” said the Fund’s managing director.
Georgieva said the duo committed to keep working together "on an IMF-supported programme that can help Argentina and its people overcome these challenges, by strengthening economic stability, protecting the most vulnerable and setting the basis for more sustainable and inclusive growth."
“We talked about the urgent need to continue to fight the Covid-19 pandemic to preserve lives and livelihoods, as well as the unique challenges facing middle-income countries,” said Georgieva. “In this regard, we discussed the importance of global cooperation in helping to ensure a more equitable and durable economic recovery, especially to support vulnerable countries.”
The IMF chief said that Fernández had detailed “the important efforts the Argentine authorities are making to address the deep social and economic challenges facing the country, which have been aggravated by the pandemic.”
"I also took note of President Fernández's request for a reform of the IMF's surcharges policy," she said in a statement.
Earlier this week, Fernández called for the IMF to suspend surcharges applied by the lender to countries that use its credit lines extensively. According to reports, such a move could save Argentina as much as US$950 million next year.
“I expect its suspension during the pandemic. I hope the Fund’s board discusses this in its October meeting, and once and for all, eliminates them,” said the Peronist leader on Tuesday at a press conference.
Spanish Prime Minister Pedro Sánchez also backed Argentina’s stance. These surcharges are "obviously greatly hurting Argentina's financial possibilities," he said.
The IMF charges a rate of 200 basis points over outstanding loans above 187.5 percent of a country’s quota, surging to 300 basis points if a credit remains above this percentage after three years, according to its website.
The multilateral lender says it imposes surcharges on some debtors to create an incentive for nations to exit its lending programmes as quickly as possible.
Argentina is looking to replace a lending programme signed by the Mauricio Macri government in 2018. A US$2.4-billion loan with the Paris Club of creditor countries that provide sustainable solutions to debtor countries is also due soon.
This president’s European jaunt offered him a break from tensions at home, amid reports of friction and tension within the ruling Frente de Todos coalition, a lethal second wave that continues to strike Argentina and a battle with the opposition over the continuation of in-person classes at schools in the nation’s capital.
On the international front, however, things could not have gone much better, with Fernández receiving the support of four countries – Portugal, Spain, France and Italy – and their leaders over Argentina’s push to renegotiate with the IMF and Paris Club.
"We want Argentina to reach an agreement with the International Monetary Fund as soon as possible for a programme that restores the country's macroeconomic stability. I know of your efforts, president, and France is by your side," said French President Emmanuel Macron after a working lunch with Fernández at the Élysée Palace on Wednesday.
"We also encourage Argentina to deal constructively with the creditors of the [Paris] Club, in accordance with the principles of the Club. I think this is very important," added the French leader.
The Peronist leader in turn praised Macron and hailed France for “always accompanying” Argentina.
Sanchez also announced he will visit Argentina on June 8 and 9 and that his Cabinet had approved a plan to boost Spanish exports and investments abroad by US$5.6 billion over the next two years. The PM said that Latin America and “especially Argentina” would be a priority.
Fernández will be hoping those signs of support will leave him in a strengthened position when it comes to crunch talks with the IMF – and hoping that internal disputes don’t weaken his stance.
While he was away this week, tensions in the Frente de Todos coalition rose over the fate of funds released from the IMF’s special drawing rights (SDR) scheme.
Argentina is set to receive around US$4.5 billion in August, but Kirchnerite leaders in the ruling coalition are already pressuring Guzmán to deploy those funds for the pandemic, rather than the payment of debt. This week, the Senate approved a non-binding resolution to that end.
Both Fernández and Guzmán this week played down the initiative on the tour, arguing it is "a simple draft declaration."
Those close to the economy minister say he will not seek to pay down debt with the funds, but rather to strengthen Central Bank reserves.