Economy Minister Martín Guzmán will travel to the United States later this month as the government seeks to speed up negotiations with the International Monetary Fund over a new financing programme.
Diplomatic sources said this week that while a date had not yet been confirmed, Guzmán intends to visit Washington DC before March, though any trip will be dependent on US protocols put in place to tackle the spread of Covid-19.
A spokesperson for the Economy Ministry said Thursday that the trip would “probably be at the end of the month,” adding that “at some point in negotiations they will have to put aside virtual contact and travel to Washington.”
Argentina is hoping to renegotiate repayments on a US$44-billion loan granted to the Mauricio Macri administration by the Fund in 2018. The credit line was originally meant to be US$57 billion, but President Alberto Fernández halted disbursements when he took office in December 2019.
On Monday, the government paid the Fund US$315 million, the first of seven payments due this year. Under the terms of its previous agreement, Argentina is due to pay US$14.85 billion in total in 2021, with the heaviest maturities set for September.
Addressing the World Economic Forum in Davos virtually last week, Fernández said talks with the IMF were “underway and very constructive.”
As soon as possible
According to reports, Guzmán wants to travel to Washington as soon as possible to ramp up talks. He intends to request meetings with new US Treasury Secretary Janet Yellen and IMF Managing Director Kristalina Georgieva.
The United States holds a large influence over the IMF’s board of directors and Guzmán intends to ask Yellen to support Argentina’s position in talks over a new financing programme, with the government seeking to prioritise economic recovery over fiscal adjustments.
Notably, one of Yellen’s closest advisors in her new post will be David Lipton, a former number two at the IMF who is well aware of Argentina’s case. Yellen is also on good terms with former Nobel Prize-winning economist Joseph Stiglitz, Guzmán’s mentor and a supporter of Argentina’s bid to renegotiate terms.
The government plans to ask the IMF for an Extended Fund Facility (EFF) arrangement as part of the government's efforts to delay repayments on its debt. Typically, EFF schemes require economic reforms as part of any deal and feature a longer grace period for repayments.
Guzmán said last week that he wants to close a deal with the IMF before May, when Argentina is due to pay US$2.4 billion to the Paris Club group of creditor nations.
"It would be acceptable for us to finish negotiations before the deadline with the Paris Club, in May 2021," the minister told the Latin Finance Connect website in an interview.
Speaking on Thursday at an online press briefing, IMF spokesperson Gerry Rice said officials were “working hard” to close an agreement with Argentina before the end of May, adding that an in-person visit could take place “in the coming weeks.”
“The talks on a possible future programme are continuing between the Argentine Government and the IMF staff team. We're working hard with the authorities toward reaching an agreement on a programme that could be supported by an Extended Fund Facility,” he told reporters.
Rice also confirmed that the IMF was onboard with Guzmán’s preferred timeline and that a “virtual” staff mission team would ‘visit’ Argentina’s officials in the coming weeks.
“We don’t have a precise timeline yet for an eventual agreement,” said the IMF spokesperson. “Minister Guzmán just last week reiterated the authorities wish to complete these negotiations by May this year and we will continue to do our utmost to meet the minister's timetable.”
Pushed by reporters as to whether such a timeframe was feasible, Rice said the IMF would “try to meet that timetable” and that discussions were continuing.
Argentina’s economy has been in recession since 2018 and registered inflation of 36.1 percent last year, according to official data. Increases in the price of a basic basket rose 45.5 percent, driving an increase in poverty that now exceeds 40 percent of the population.