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ECONOMY | 18-12-2021 08:09

President Fernández speaks with IMF chief after budget fiasco

IMF Managing Director Kristalina Georgieva and President Alberto Fernández share “very good meeting” as talks over debt restructuring continue.

President Alberto Fernández held a “a very good” videoconference meeting with International Monetary Fund Managing Director Kristalina Georgieva on Friday, as talks over Argentina’s multi-billion-dollar debt to the multilateral lender continue.

The duo spoke just hours after the lower house Chamber of Deputies rejected the government’s 2022 budget proposal, a new blow for Fernández as he enters the second half of his presidency. 

Moments after the call had finished, Georgieva posted on Twitter that she had a "very good meeting with President @alferdez on advancing our work to sustain #Argentina's recovery and address its economic challenges."

Argentina is seeking to restructure payments on more than US$40 billion in debt from a record US$57-billion credit-line granted by the IMF in 2018. 

Fernández spoke to Georgieva to review the state of negotiations. The president’s spokespeople said the call was scheduled well in advance of the vote in Congress, but that it became a subject of discussion. 

“We both recognised the unexpected problem of the rejected budget, but we committed to continue working fully focused on materialising an agreement that will not compromise the continuity of the inclusive economic recovery,” Fernandez tweeted after the meeting.


‘Weakens us’

In a series of posts on Twitter, Economy Minister Martín Guzmán warned Friday that the defeat in Congress would “affect” Argentina’s multi-billion-dollar debt negotiations with the Fund.

The minister said the loss in the lower house “weakens us as a nation-state within Argentina and before the world. And that hurts us."

The proposed budget was defeated by 132 to votes to 121 in the lower house Chamber of Deputies, where Frente de Todos is in the minority.

Guzman said the rebuttal "signifies rejecting the macro-economic programme that is the basis for the negotiations with the IMF to refinance the absurd and damaging US$44-billion debt."

Fernandez's government has been attempting to renegotiate the terms of the IMF debt – acquired under his centre-right predecessor Mauricio Macri – almost since the moment he took office.

A payment of US$1.8 billion is due to the Fund on December 22, as part of the current calendar that Argentina seeks to renegotiate. 


No deadline

Speaking on Thursday, IMF Spokesperson Gerry Rice reiterated that there is no deadline for an agreement with Argentina, despite reports suggesting the government wants a deal agreed before March.

Rice told the press that both the IMF and the Argentine government were working to close a deal and acknowledged that “general understandings” had been reached.

Previous to this week’s budget fiasco, officials in Buenos Aires had said that it would be necessary to pass the 2022 budget bill and outline central government spending before any deal could be agreed

Talks with the IMF at present are focused on Argentina’s fiscal deficit and the tools available to the national government to reduce it at a speed that will allow it to recreate a surplus in the shortest possible time to ensure the repayment of debt to private and institutional creditors. 

Fund officials say this will help to curb inflation and that the same request was made to Macri when he agreed the 2018 record credit-line. 

Earlier this week, Presidential Spokesperson Gabriela Cerruti said that the government would consider calling extraordinary sessions outside of when Congress normally meets in order to discuss any agreed deal with the Fund.

"We understand that this will take place during the extension of the ordinary sessions or in extraordinary sessions that will have to be called in January or February, she said.



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