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ECONOMY | 24-09-2020 18:50

IMF says it will send mission team to Argentina in October

IMF says a mission team will visit Argentina at the start of next month, as talks over a new financing programme begin in earnest.

The International Monetary Fund (IMF) announced Thursday that it will send a mission team to Argentina in early October, as talks over a new financing programme begin in earnest.

President Alberto Fernández's government reopened formal talks with the Fund last month, with Argentina needing to reschedule repayments due on the record US$57-billion credit-line the Mauricio Macri administration secured from the IMF back in 2018. 

The country has received US$44-billion to date and has said it does not want the rest of the money.

"The staff visit, as we call it, will begin in early October," said IMF spokesman Gerry Rice, noting that it is not yet known whether the mission team will travel in person or if discussions will take place online.

"The goal of that mission would be to learn more, firsthand, about the Argentine authorities' plans and priorities, which could underpin the IMF support programme, which has been requested," he added, saying that the Fund was currently in "listening mode."

Rice called the scheduled visit by the IMF team a "milestone," saying it was "the beginning of the process."

"It will take time," he added. "There is no set deadline for reaching a conclusion." 

IMF Managing Director Kristalina Georgieva confirmed on August 26 that talks over a new financing programme had formally begun, at the request of the Fernández administration.

"We look forward to deepening our dialogue on how we can support the government's efforts to address the impact of the pandemic, boost growth and job creation, and reduce poverty and unemployment while strengthening macroeconomic stability for the benefit of all Argentines," the Fund said in a statement at the time.

Argentina has just restructured some US$100 billion in debt, both local and under foreign legislation, a step that analysts consider essential but not sufficient to ensure economic recovery.

Now, the Fernández government is seeking a new agreement with the IMF to replace the one signed in 2018 by his predecessor Mauricio Macri for 57,000 million dollars, of which the country has already received 44,000 million. Upon taking office last December, Fernández suspended the agreement and ordered the retention of the final tranche.

In 2006, after having paid off most of its debt to the IMF, Argentina froze its relations with the international lender until 2018, when Macri went to the Fund for assistance.

Argentina entered into recession in 2018 and its economy is expected to suffer even more this year from the coronavirus pandemic. The IMF calculates a 9.9 percent contraction in the Gross Domestic Product (GDP) for 2020, though private estimates put the figure higher.

The government predicted growth of 5.5 percent of GDP next year in its budget bill, with a fiscal deficit of 4.5 percent of GDP, inflation of 29 percent and an exchange rate of 102.4 pesos per dollar.

According to official data, the economy registered a 19.1 percent contraction in the second quarter of this year. 

This week in his speech sent to the UN General Assembly, Fernández indicated that the negotiations with the IMF will be approached "being respectful of the commitments contracted, while avoiding putting at risk the conditions that allow economic reactivation."


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