Argentina and the International Monetary Fund are "working intensively" to reach an agreement over the fifth review of the country’s record credit programme amid a "very complex and challenging" situation, an IMF spokeswoman said Thursday in Washington.
"Our team has been working intensively with the Argentine authorities to help make progress and move forward to finalise the fifth review and to help the authorities address a very complex and challenging situation," said IMF spokesperson Julie Kozack at a press conference on Thursday.
Argentina is seeking to loosen targets outlined in the US$44.5-billion credit programme agreed last year by President Alberto Fernández’s government. Under the terms of the deal, the country must increase its international reserves at the Central Bank and reduce its fiscal deficit from three percent of gross domestic product in 2021 to 2.5 percent in 2022, 1.9 percent in 2023 and 0.9 percent in 2024.
However, Argentina’s economic situation has since worsened, with year-on-year inflation now running at more than 110 percent. Poverty is close to 40 percent, according to the INDEC national statistics bureau, while a historic drought has slashed some US$20 billion off foreign exports.
According to Kozack, current negotiations are focused on "alternatives to strengthen the authorities' programme.” She said that any changes would “recognise the impact of the drought on the economy."
The IMF’s aim, said the spokesperson, is to "safeguard stability by increasing reserve accumulation and improving fiscal sustainability" while "protecting the most vulnerable sectors."
Talks have dragged on for months as both sides continue to negotiate over key issues like the IMF’s disbursements to Argentina and currency policy. Kozack declined to offer further details of the negotiations.
A delegation of officials from Argentina's Economy Ministry flew to Washington on Tuesday to continue face-to-face talks.
Earlier on Thursday, Government Spokesperson Gabriela Cerruti stated that talks with the IMF would "take as long as they have to take.”
"What is delaying the negotiations is the Argentine Government's defence of what is best for Argentina and in what terms an agreement that does not affect growth, distribution, everything that is underway and we see how it is growing and consolidating," said the spokeswoman.
Time is pressing because the IMF’s directors are due to have a vacation break in August, the same month as Argentina's presidential primary elections, in which Economy Minister Sergio Massa is running for the ruling Unión por la Patria coalition.
On Monday, Massa cast doubt over whether he would continue to serve as minister as the presidential campaign ramps up, saying he would discuss the issue with President Fernández and Vice-President Cristina Fernández de Kirchner.
“We will decide that with the president, with the vice-president, depending on how the context plays out,” Massa said, without providing timing for the decision. “It’s clear to me that my main responsibility is to be economy minister, and I have a task after 6pm, which is to be a presidential candidate.”
Kozack also confirmed Thursday that Argentina’s government has so far complied with its financial obligations.
On June 30, the country paid down debt maturities totalling US$2.7 billion, using IMF special drawing rights (SDRs, IMF reserves) and Chinese currency to make the payment.
"The renminbi [yuan] is one of the five freely usable currencies that member countries can use and have used to settle their obligations to the IMF," confirmed Kozack.
Earlier this year Argentina renewed a currency swap agreement with China for 130 billion yuan, equivalent to some US$19 billion
Earlier this month, the government announced that it will push back payments due this month and bundle them into a single transaction that will be paid at the end of the month. It has permission to do so under IMF rules.
Kozack also denied reports that the IMF had received a letter from the Chinese government urging it to reach an understanding with Argentina.