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ECONOMY | 27-01-2022 16:37

Argentina says IMF payment depends on progress in talks

Government spokesperson refuses to confirm if country will make US$730-million payment to the IMF this Friday, saying decision depends on the progress of talks.

A spokesperson for Argentina's government has refused to confirm if the country will make a US$730-million payment to the International Monetary Fund this Friday, saying the decision depends on the progress of talks to restructure the country's multi-billion-dollar debt with the multilateral lender.

“What is going to happen, we will know in the next few hours,” Government Spokeswoman Gabriela Cerruti said at a press conference on Thursday.

“Argentina’s government is willing to reach an agreement to pay in a sustainable manner,” she added.

Pressed further by reporters, Cerruti said that "the payment depends on how the negotiations progress," confirming that the decision lie with President Alberto Fernández and Economy Minister Martín Guzmán.

In addition to Friday's maturity, Argentina faces another payment of US$370 million on February 1 next week.

Argentina is seeking a new agreement with the IMF to refinance its US$44-billion debt acquired via the US$57-billion stand-by loan granted in 2018 to the government of Mauricio Macri, Fernández's predecessor. Upon taking office in December 2019, the Peronist leader refused to accept the remaining US$13 billion of the record credit-line – the largest ever granted by the Fund.

According to the terms of the deal agreed by Macri's Cambiemos government, Argentina must pay about US$19 billion this year, another US$20 billion in 2023 and more than US$4 billion in 2024.

"The discussions are being held with a lot of intensity and with a lot of vocation and willingness to reach an agreement. It is a negotiation that has moments, from day to day, from hour to hour, like these," said Cerruti.

According to the government, the size of fiscal deficit in the coming years is the main sticking point. Argentina is refusing to reduce it (three percent of GDP in 2021) by cutting public spending.

The official insisted that "we will not reach any agreement that compromises the path of growth." The economy is forecast to grow four percent, according to the government, and three percent, according to the IMF.

GDP expanded by close to 10 percent last year, after slumping 9.9 percent in 2020 amid the coronavirus pandemic.

Without access to international credit markets, Argentina has just under US$39 billion in gross reserves, but analysts estimate that liquid reserves are below US$4 billion.

"There is predisposition and willingness to reach an agreement that will allow us to pay in a sustainable way the debt that Mauricio Macri contracted with the IMF, which will be a problem for many years that we have inherited and which we are not taking care of," said Cerruti, pointing the finger at the centre-right former head of state.

 

– TIMES/AFP

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