Argentina and the International Monetary Fund (IMF) They have finally sat at the same table. The arrival in Buenos Aires on Wednesday of a technical mission has been the starting signal of the negotiation for the future of the external debt of the South American country, considered unpayable by the Peronist Administration Alberto Fernandez. For a week, the parties will analyze the government accounts and the practical possibilities of a new payment plan that will make the debt of 44,000 million dollars “sustainable” Mauricio Macri contracted with the IMF in 2018. Argentina needs the support of the international organization to also move forward in the negotiation with private creditors, who expect payments for this year alone for 37,000 million dollars.
The mission of the International Monetary Fund coincided with an informative presentation before the Congress of the Minister of Economy, Martín Guzmán, in charge of the talks. The official has not revealed details, but has given at least an idea of the path that Casa Rosada intends to follow. He has said that the Government has “a very defined economic program” that does not contemplate the reduction of the fiscal deficit, has blamed the IMF for the responsibility of the debt crisis that Argentina is going through and has warned that the Executive will not allow “foreign investment funds set the pattern of macroeconomic policy. ” He also said that the final objective of the negotiation with the IMF is to reach a “long-term sustainable” solution to the problem of chronic indebtedness that the country has.
“The IMF loan was not used to increase the country’s productive capacity, it was used to pay unviable debt and to finance the outflow of capital,” said Guzman. “The IMF is responsible for the debt crisis, also Argentina and the bondholders who decided to bet on a high rate and a model that failed, “he insisted before the deputies, who on the eve approached the minister a list with 122 questions about the negotiating process.
The street also welcomed the IMF mission, headed by the Deputy Director of the Department for the Western Hemisphere, Julie Kosack, the Venezuelan Luis Cubeddu, in charge of the Argentine case. Social movements related to the government marched as a protest for Buenos Aires, in what has been a delicate game of balances between the support for the negotiations that Alberto Fernández is carrying out and the historical repudiation that they maintain with everything that smells of the International Monetary Fund .
The Venezuelan Cubeddu is an old acquaintance in Buenos Aires, because he was already in charge in 2003 of the renegotiation of the debt made by the deceased former president Nestor Kirchner Those conversations ended on January 3, 2006, when Kirchner canceled the $ 9.8 billion that Argentina owed to the IMF in a single payment, which led to the breakdown of formal relations. The current reality is very different.
In mid-2018, Macri returned to the IMF to request a financial rescue. The markets had closed the tap on loans to Argentina and the multilateral agency gave the South American country a credit line of 57,000 million dollars, the largest ever granted. When the economic situation jumped through the air at the end of 2019, the IMF decided to suspend aid. Macri had received 44,000 million of the agreed total and, at that time, had to admit that he could not cope with the maturities committed. Months before leaving power, initiated a “reperfilation” of debt obligations, both with the International Monetary Fund and with private creditors, holders of Argentine bonds for about 66,000 million dollars. Dirty work remained for his successor.
The Fund’s mission will meet with senior Argentine officials, but also with bankers, financial analysts and businessmen. The idea is that an overview of the Argentine accounts be taken to Washington and “better understand the measures being taken to improve the situation of poverty and revive the economy,” the IMF regional auditor said at the end of January, Alejandro Werner
Relations between Argentina and the Fund were frozen since Fernandez’s victory in the primary elections last August. The IMF understood that it would not be Macri who should solve the debt problem and preferred to wait for the first steps of the new Government. He even decided to exclude the Argentine case from his world economic report due to lack of precision. That is why he maintained the growth goal he had made in October, with a negative forecast of 1.3% by 2020 and a slight uptick of 1.4% for next year. The arrival this Wednesday of the mission to Buenos Aires implies the normalization of relations.
Minister Guzman had already taken a first step last week in Rome, when he met with the agency’s director, Kristalina Georgieva. On the eve of the visit, however, it was not quite peaceful. The Government unilaterally postponed the amortization of 96,000 million pesos until September 30 (Approximately 1.6 billion dollars, about 1.440 million euros) of capital of the AF20 bond, a dual letter issued in pesos but tied to the price of the currency in the local market. Before, he had tried, unsuccessfully, a swap of the bonds and the issuance of a peso title to obtain fresh money.
Street protests
Under the slogan “The debt is with the people”, thousands of people have mobilized during the afternoon of this Wednesday in the center of Buenos Aires against the visit of the IMF, which they accuse of having borrowed the country by granting a loan non-viable. Left-wing parties, social movements related to the Fernández Government and unions have led the march that ended in front of the Argentine Congress at the same time as the Guzman exhibition.
With the exception of the leftist parties, many of the protesters support the Peronist Executive and do not oppose the negotiation with the international organization, but demand that any agreement contemplate the protection of the most vulnerable. “We support the negotiations with the warning that we are not willing to pay the debt with hunger and unemployment,” said the head of the Union of Workers of the Popular Economy, Esteban Castro, in the call for protest.
Fernández came to power at the head of a broad coalition that also included politicians who were critical of Kirchnerism – such as Victoria Donda, appointed head of the National Institute against Discrimination, Xenophobia and Racism – and from social movements, such as Daniel Menéndez , Undersecretary of the Ministry of Social Development. Both participated in the demonstrations, which shows once again the internal tensions that the Argentine president must face.
“It is a massive mobilization. There are columns of different spaces that show the need to group together with a sense of firmness and unity,” Menéndez said from the street. Menéndez considers that the IMF “has been complicit in a process of escape and acted irresponsibly in relation to debt” carried out by the Government of Macri. “The millionaire debt that they left us only served for capital flight and not for productive development. To pay you have to grow, ”Donda wrote in his Twitter account. Its position coincides with that of the ruling party, which asks for time to reactivate the economy and thus grow.
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