Government seeks to reach new IMF agreement before April

Argentina aims to reach a deal with the International Monetary Fund over a new financing programme before the end of March, according to a person with direct knowledge of the matter.

The government, which sealed an initial US$65-billion debt agreement with its private creditors on Tuesday, will look to begin formal negotiations with the Fund after September 4, which is the date in which the deal with bondholders will settle, the person said, asking not to be named because the talks are private.

The country’s goal is to have a new programme before the end of the first quarter of 2021, so that it has enough time to renegotiate a US$2-billion payment owed to the Paris Club and maturing in May, according to the person. The Paris Club is an informal grouping of 22 country lenders.

With the private debt renegotiation almost complete, President Alberto Fernández is turning his attention toward the IMF as the country looks to reschedule over US$44 billion in loans with its senior creditor and replace the stand-by credit line signed by the previous administration in 2018.

Argentina may request to start the talks, a formal step necessary to kick off the negotiations, as early as this month, the person said.

Still, government officials have publicly said they will take their time.

“There is no rush to start negotiations with the IMF,” said Cabinet Chief Santiago Cafiero in an interview with local TV Pública station late Wednesday. The Fund “has been frank in its understanding of the limits of Argentina’s socioeconomic limits; we hope that will continue.”

A spokesman from the Economy Ministry declined to comment. The IMF stands ready to support Argentina, including engaging with the authorities on a new program when they desire it, but at this stage no request has been made, a spokesman for the Fund said.

One of the principles of the Paris Club is that it only considers negotiating its loans with countries that have a current facility with the Washington organisation, according to its website. Argentina was supposed to make the US$2-billion capital and interest payment in May, but requested to postpone it by a year.

The country’s principal repayments to the Fund don’t begin until the third quarter of next year. It remains to be seen if Argentina will seek to roll over its existing debt into a new version of the same stand-by deal or into a longer-term program that requires more reforms, called an extended fund facility.

The Fernández administration cancelled the previous standby-arrangement with the Fund, and would seek a new “very distinct” agreement, Economy Minister Martín Guzmán said Tuesday after the creditor deal was announced.

IMF Director Kristalina Georgieva praised the deal in a tweet that day, calling it a “significant step.”