The International Monetary Fund said Monday it will start talks with the government on a new rescue package in mid-November.
A team from the Washington-based crisis lender met with officials in Buenos Aires in recent days to discuss the country's challenges amid the coronavirus pandemic, including debt owed to the fund, and to "exchange views on how best to address them," the IMF said in a statement.
"IMF staff will continue to engage closely with the authorities. Staff plans to return to Buenos Aires in mid-November to initiate discussions on a new IMF-supported programme," the statement said.
Even prior to the pandemic, Argentina was facing a severe economic crisis despite massive IMF lending in recent years, and the Fund said the Covid-19 crisis exacerbated already high unemployment and poverty rates.
President Alberto Fernández's government is hoping to renegotiate repayments on a US$44-billion loan from the IMF in 2018.
It was originally meant to be US$57 billion, but the Peronist leader halted disbursements when he took office in December 2019. The first repayments are due in September 2021.
"Argentina is facing complex economic and social difficulties, in the context of an unprecedented health crisis," the IMF said in a statement.
"The deep recession has led to an increase in already-high poverty and unemployment levels, the effects of which are being exacerbated by significant pressures in the FX market.
"These are exceptionally difficult challenges with no easy solutions. A comprehensive set of policies could underpin a restoration of confidence, but will need to be very carefully calibrated to promote the recovery and secure macroeconomic stability."
The Fund's mission team – led by Julie Kozack, IMF deputy director of the Western Hemisphere Department and Luis Cubeddu, mission chief for Argentina – said they "gained a deeper understanding of the authorities' policy plans to stabilise the economy and put it on a more sustainable and inclusive growth path."
The team said it "welcomed the authorities’ commitment to policies to secure a growth-friendly fiscal consolidation while also protecting the most vulnerable, enabling a gradual reduction in inflation, and boosting job creation, investment and exports."
In August, Economy Minister Martín Guzmán and his team managed to restructure a US$66-billion foreign bond debt that was worth 54.8 cents on the dollar.
Argentina has been in recession since 2018 and inflation is running over 40 percent. Unemployment is on the rise and poverty currently affects 40.9 percent of the population. The economy is expected to contract by more than 12 percent this year.