President Alberto Fernández said Tuesday he will not allow the International Monetary Fund (IMF) to impose austerity measures on Argentina during talks over a new financing programme.
The government, which sealed an initial US$65-billion debt agreement with private foreign creditors last week, is looking to open formal negotiations with the Fund after September 4 over repayments for Argentina’s US$44-billion credit line, according to official sources.
Argentina took a loan of US$57 billion from the IMF in 2018 – the Fund’s largest ever – under former president Mauricio Macri, though President Fernández said he did not want to receive the remaining disbursements upon taking office.
The government is seeking to seal a deal before the end of March 2021, officials have briefed, with the first repayments currently due to begin in late December.
Given the coronavirus pandemic and Argentina’s economic turmoil, the country is not in a position to accept any conditions from the IMF, Fernández said Tuesday in a radio interview.
"I am not in a position to accept any conditionality. I am not in a condition because Argentina is not in condition to," Fernández said, referring to upcoming talks with the Fund.
"I ask them to trust us because we cannot accept conditions that require us to make adjustments [austerity measures], though we know that we must fulfil our obligations," he added.
The Peronist leader nevertheless praised the support the IMF had given Argentina during its negotiations with bondholders.
"If the Fund said, as it was, that the debt is not sustainable, it is because they said that Argentina has nowhere to get the resources from. That is the same as saying that Argentina has nowhere to adjust," the president stressed.
"We are at a time where everything is under discussion. The Fund's dogma has already fallen to pieces," he insisted.
Long and complex
Speaking this week, Economy Minister Martín Guzmán predicted that talks with the IMF will be “long” and “complex.”
"We do not see an agreement arriving quickly due to the number of issues that must be negotiated," Guzmán said in a radio interview. He vowed that officials would go through “every detail on the basis of prudence."
Pushed on a timeframe, amid reports that the government wants to reach an agreement with the Fund by April next year, the minister said it would “take months,” adding that it was “possible that only at the beginning of next year” would an accord be reached.
Argentina has been in recession since 2018 and a steep contraction is expected this year as a result of the coronavirus pandemic. Around 40 percent of the nation is living in poverty.
The IMF’s most recent estimate predicts that gross domestic product wil shrink by 9.9 percent this year, though private forecasts point to a bigger decline.
Public debt totals US$324 billion, close to 90 percent of GDP.