The International Monetary Fund and the government announced Saturday that they have agreed to start talks aimed at reaching a new financing agreement to tackle the country's debt burden.
The announcement in statements by both parties came after a meeting between IMF Managing Director Kristalina Georgieva and Economy Minister Martín Guzmán on the sidelines of a G20 meeting in Riyadh. The duo discussed plans for a “secure and orderly resolution” of Argentina’s debt situation, the IMF said on Saturday.
The meeting came days after IMF experts concluded that Argentina's debt is "unsustainable."
President Alberto Fernández hopes to renegotiate US$195 billion of its US$311 billion foreign debt, including a deeply unpopular US$57 billion IMF bailout loan in 2018.
The Peronist leader, who took office in December, has refused the final US$13 billion disbursement of the loan, leaving Argentina's exposure with the Fund at US$44 billion.
"Minister Guzmán and I had a very fruitful exchange of views on the country's challenges, and the path forward to ensure a more sustainable and inclusive growth for Argentina," Georgieva said in a statement.
"I commended the efforts thus far, under the leadership of ... Fernández, to put in place a set of policies to stabilise the economy and to reduce poverty."
Georgieva said she discussed with Guzmán plans "to secure a sustainable and orderly resolution" to his country's debt situation, and welcomed Argentina's commitment "to deepen our engagement including through an 'Article IV Consultation' and steps toward a Fund-supported programme in the future.
"The modalities of these next steps will continue to be discussed," Georgieva said.
The Economy Ministry issued a similar statement on engaging in talks with the global financing institution.
Negotiations will continue Monday as Guzmán meets with IMF experts in Washington, an economy ministry spokesman told AFP. He is scheduled to see IMF staff on February 24, officials with the Fund confirmed.
The economy shrank by 2.1 percent in 2019, the INDEC national statistics bureau said Friday. The country has been in recession since mid-2018 as poverty and unemployment rise, with inflation surpassing 50 percent over the last year.
Argentina's ability to service its debt deteriorated markedly compared to the IMF's last analysis in July 2019, the fund said earlier, when the amount owed was manageable. Since then the peso had depreciated by over 40 percent, international reserves declined by about US$20 billion, and real GDP contracted more than previously projected.
Argentina will allow the IMF to conduct a so-called 'Article IV review,' a preliminary step that could eventually allow for a new programme with the IMF, the Economy Ministry said in a statement.
Investors have been alert to developments this week since the organisation said creditors would need to make a “meaningful contribution” to lighten the nation’s staggering debt load.
The Article IV consultation is an annual review process wherein a team of IMF economists visits a country to assess economic and financial conditions. Former president Cristina Fernández de Kirchner refused to undergo the assessment while in office, but her successor, Mauricio Macri, agreed to resume the process in 2016.