The International Monetary Fund and Argentina are negotiating under the multilateral organisation’s Extended Fund Facility (EFF) programme, IMF spokesman Gerry Rice told the press on Thursday.
While adding that it was impossible to announce any specific date for an agreement (if indeed one is concluded), Rice highlighted that the recent discussions between the IMF and Argentine government representatives had been "very productive."
Rice was referring to the meetings of IMF Managing Director Kristalina Georgieva and Economy Minister Martín Guzmán around the fringes of the G20 ministerial summit in Venice, followed by a series of others attended by Julie Kozack, the Deputy Director of the IMF’s Western Hemisphere Department, and Luis Cubeddu, mission chief for Argentina.
The meetings, which took place between July 8 and 12, "centred on policies to boost economic recovery and stability and the creation of jobs," said an IMF statement Tuesday, adding: "In particular there were advances in identifying the policy options for developing domestic capital markets, mobilising tax revenue and strengthening Argentina’s external resilience."
Argentina’s Economy Ministry said in a separate statement that the meetings between the two sides’ technical teams had “brought progress and understandings on key issues of the government's economic programme.”
"In particular, concrete advances were made in understandings regarding policies for the development of the domestic capital market, tax administration, and the development of foreign exchange generating sectors,” it added.
Argentina, undergoing its third straight year of recession and excluded from capital markets in the midst of the coronavirus pandemic, is seeking to restructure payments on the record stand-by loan of US$57 billion obtained by ex-president Mauricio Macri in 2018 in order to avert a financial crisis.
But on the eve of his inauguration in late 2019, President Alberto Fernández decided to suspend all further tranches with the argument that "Argentina today cannot return even a dollar." The country ended up receiving US$44 billion.
Talks between the IMF and Argentina have been ongoing since the Fernández administration took office. Both sides had initially hoped to reach a new agreement by March this year, but that deadline now seems to have been pushed back, most likely into 2022. Primary and midterm elections will take place in Argentina later this year.
However, reports this week in local outlets said that Guzmán would like to seal a deal before September if possible, given there are two key repayments due towards the end of the year. There is resistance to that idea within the ruling coalition, with some preferring not to be seen making any debt repayments in an election year.
The government has already made two interest payments of US$300 million to the IMF this year, back in February and May. Additional payments of US$350 million and US$400 million are due in August and November respectively. Maturities on the principal of US$1.9 billion are also scheduled for September and December.
In addition, Argentina faces total repayments of almost US$40 billion over 2022 and 2023, a prospect President Fernández described as “unpayable.”
An EFF programme seeks to assist countries with serious medium-term balance of payments problems due to structural defects which cannot be resolved in a short time. It lasts longer than a stand-by agreement – up to 10 years – with longer periods of reimbursement, the IMF explained, but also carrying stricter conditions for structural economic reforms.
Asked about possible access to the "Green Fund" being developed by the IMF, Rice replied that this was "a question apart" which could be examined at another time.
Rice further informed that towards the end of next month the IMF hopes to implement the expansion of its Special Drawing Rights (SDRs), from which Argentina stands to obtain over US$4.3 billion.