Officials from Argentina’s government and the International Monetary Fund made progress during “productive” talks over a new financing programme on the sidelines of the G20 summit in Venice this week.
The IMF said in a statement that meetings between Economy Minister Martín Guzmán and his aides and an IMF mission team led by Julie Kozack, deputy director of the Fund’s Western Hemisphere Department, and Luis Cubeddu, mission chief for Argentina, had helped push forward negotiations, with both sides continuing to work together towards a deal.
Both sides “discussed the evolution of the global environment and the Covid-19 pandemic and their implications for Argentina’s macroeconomic framework,” said the Fund, which described the July 8-12 meetings as “productive.
“Discussions focused on policies to strengthen the recovery, economic stability, and job creation. In particular, progress was made in identifying policy options to develop the domestic capital market, mobilise domestic revenue, and strengthen Argentina’s external resilience,” it added.
The IMF said it would work with the Argentine authorities to continue “further deepening their understandings in these key areas,” adding that its “goal is to support Argentina as it durably addresses its economic and balance of payment challenges.”
Argentina’s Economy Ministry said in a separate statement that the meetings between the two sides’ technical teams had “brought progress and understandings on key issues of the government's economic programme.”
"In particular, concrete advances were made in understandings regarding policies for the development of the domestic capital market, tax administration, and the development of foreign exchange generating sectors,” it added.
New programme, due repayments
Argentina is seeking a new programme to replace the one originally signed in 2018 by then-president Mauricio Macri. The country has received around US$44 billion of the US$57 billion agreed under that deal. President Alberto Fernández refused the final tranche of the loan upon taking office in December 2020.
Talks between the IMF and Argentina have been ongoing since the Fernández administration took office. Both sides had initially hoped to reach a new agreement by March this year, but that deadline now seems to have been pushed back, most likely into 2022. Primary and midterm elections will take place in Argentina later this year.
However, reports this week in local outlets said that Guzmán would like to seal a deal before September if possible, given there are two key repayments due towards the end of the year. There is resistance to that idea within the ruling coalition, with some preferring not to be seen making any debt repayments in an election year.
The government has already made two interest payments of US$300 million to the IMF this year, back in February and May. Additional payments of US$350 million and US$400 million are due in August and November respectively. Maturities on the principal of US$1.9 billion are also scheduled for September and December.
In addition, Argentina faces total repayments of almost US$40 billion over 2022 and 2023, a prospect President Fernández has described as “unpayable.”
Last year, the government managed to renegotiate a separate US$66-billion loan with private bondholders that was worth 54.8 cents on the dollar.