Friday, December 8, 2023

ECONOMY | 20-02-2021 08:18

Bondholders: ‘Argentina desperately needs agreement with the IMF’

Private bondholders group, who previously agreed to restructuring, accuse government of dragging its feet in talks with IMF to “continue its unsustainable policies even longer."

One of Argentina’s largest creditor groups have slammed the government, criticising the “erratic” policies of the Alberto Fernández administration and accusing it of dragging its feet during debt talks with the International Monetary Fund (IMF).

The comments come just five months after the Ad Hoc Group of Argentina Exchange Bondholders agreed to sign up for the government’s offer to restructure US$65 billion in foreign debt. 

“With a multi-decade restructuring of its external debt burden at low interest rates, agricultural commodity prices near record highs and a natural rebound in economic activity from pandemic lows, Argentina should be benefiting from significant tailwinds,” the group said in a statement.

“However, since the government concluded its historic restructuring of  international and domestic foreign currency bonds in September, local macroeconomic conditions have continued to deteriorate.”

The group criticised what it described as “poor policy choices,” citing price controls,  frozen tariffs and currency controls, arguing that they were “undermining chances for a sustainable recovery.”

The statement went on to argue that Argentina “desperately” needed to reach an agreement with the IMF over its US$44-billion credit line, issued in 2018 under the Mauricio Macri administration, as soon as possible.

“An IMF programme is the only likely source of policy anchors and a credible medium-term framework that can bring stability. However, the government appears to be seriously contemplating delaying an agreement with the IMF in order to have the freedom to continue its unsustainable policies even longer. With reserves already at dangerously low levels, such a strategy amounts to a reckless bet.”

Argentina is currently in talks with the Fund over a new financing programme, with the country due to begin repayments later this year. Economy Minister Martín Guzmán has expressed hopes that a deal could be sealed by early May, though IMF officials earlier this month cast doubt over that goal, describing it as “ambitious.”



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