Economy Minister Martín Guzmán says Argentina wants to delay all of its repayments to the International Monetary Fund (IMF) until 2024 at the earliest, as talks begin over a new financing programme.
IMF officials confirmed last week that it was in “the initial stages” of talks with Argentina over a new rescue package. Most of Argentina's repayments are due in 2022 and 2023, with almost US$40 billion due, Reuters reported
“The objective is very clear: first, we do not want to face payments with the Fund in the period from 2021 to 2024," Guzmán told local daily La Nación, in a detailed interview published on Sunday.
“We have to reach a clear horizon in terms of financial burden in the coming years and we are going towards that point. That will require negotiations that will take a while,” said the minister.
“There is no possible stabilisation without economic recovery," said Guzmán, adding that the government had "a plan for economic recovery within a framework of macroeconomic consistency.”
After defaulting on its debt in May for the ninth time in the country’s history, President Alberto Fernández’s government reached a deal with foreign creditors last month to restructure US$66 billion in debt after months of tense negotiations, giving it US$37.7 billion in debt relief. A restructuring of local debt worth some US$41 billion quickly followed.
During talks with overseas creditors, the government initially sought a three-year grace period on all payments, though it later conceded ground on its position. It did, however, eventually secure a deal to pay around 54 cents on the dollar.
In the interview, Guzmán criticised the Mauricio Macri administration, blaming the former president for what the minister saw as a dismal economic inheritance.
"We came [to office] with an unsustainable debt load," he said. "Public finances were violated, they were left in a situation with very strong deterioration and that is why the debt could not be paid down."
The minister observed that Argentina’s country risk rating had slid from 2,000 to 1,100 points since the overseas debt restructuring deal was announced.
"The country took a loan of a very high amount between 2018 and 2019," Guzmán said, referring to the record US$57-billion credit-line the IMF signed with the Macri government.
Argentina eventually received US$44 billion from the deal, signed amid a currency crisis, after President Fernández said he did not want the remaining tranches, seeking to avoid more debt.
The economic challenges that lie ahead for Argentina are significant. The country is now in its third year of recession, with around 40 percent of the population living in poverty. unemployment rose to 10.4 percent in the first quarter, and since then, the coronavirus lockdown has only exacerbated its impact.
In the first five months of 2020, the economy contracted by 13.2 percent, according to data from the INDEC national statistics bureau. The IMF predicts a 9.9 percent drop in GDP this year, though private estimates expect a steeper decline.
Inflation is currently running to around 40 percent, lower than the 53.8 percent recorded in 2019, but still among the highest rates in the world.
Guzmán said lowering inflation “is a central objective" for the government.
He also confirmed that a Budget bill would be sent to Congress imminently, adding that it would be geared towards the “recovery of activity” though with limitations, due to “financing restrictions.”