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ECONOMY | 23-12-2021 16:16

Government to continue payments while renegotiating IMF loan

The government says it will keep making payments while talks with the International Monetary Fund continue – but that it can't a deal must be agreed to restructure payments totalling US$19 billion next year.

Argentina said Thursday it had made the last US$1.9-billion down payment due for 2021 on a massive IMF loan and would continue settling the credit, whose "strategy" the lender itself has questioned.

"We want to reach an agreement, we want to pay the maturities, but we cannot do it in the way that they were scheduled for 2022," Presidential Spokesperson Gabriela Cerruti told reporters Thursday.

"Yesterday [Wednesday] the payment was made," she said, but stressed Argentina and the IMF needed to find a "sustainable" new approach for repayment.

Argentina has received US$44 billion of a US$57-billion loan from the IMF arranged under former president Mauricio Macri.

After taking office, his successor Alberto Fernández refused to accept the rest of the loan.

Argentina, the IMF's biggest debtor, has been in recession since 2018 and is seeking to renegotiate the loan agreement.

So far this year, the country with a 40-percent poverty rate and chronic inflation of a projected 50 percent for 2021, has forked out some US$5.2 billion to the IMF in down payments and interest.

The international lender, in an evaluation made public Wednesday, said the loan had failed to achieve its objectives of restoring confidence in Argentina's fiscal viability and fostering economic growth.

Instead, "the exchange rate continued to depreciate, increasing inflation and the peso value of public debt, and weakening real incomes, especially of the poor," it said.

The loan's "strategy and conditionality," it added, were "not sufficiently robust to address Argentina’s deep-seated structural problems" including fragile public finances, high inflation, a small domestic financial sector and a narrow export base.

Last week, Economy Minister Martín Guzmán said Argentina can "in no way" afford two scheduled repayments of about US$19 billion each in 2022 and 2023, describing the debt as "absurd and damaging."

Negotiations on restructuring the debt continue: Argentina and the IMF held a round of talks in Washington two weeks ago, and last week, IMF Managing Director Kristalina Georgieva and Fernández held a video conference.

In recent days, tens of thousands of Argentines have held several demonstrations against the debt, exactly 20 years since the economic crisis that saw a bankrupt country explode in looting, demonstrations and police repression that left a lasting trauma. 

The IMF evaluation said the Argentina situation held several lessons for the future, starting with a basis in "realistic assumptions" and loans "tailored to country circumstances."

Its findings, said the report, "should inform the ongoing discussions on a potential follow-up programme with Argentina."

Cerruti said Thursday that Argentina "does not have problems with international reserves" and that the Central bank was "working as best as possible to meet all commitments."

After Wednesday’s payment, Argentina’s total reserves stood at about US$39 billion, and economic analysts have warned that liquid reserves are less than US$5 billion. 

– TIMES/AFP

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