Friday, May 24, 2024

ECONOMY | 11-05-2023 16:48

Massa: IMF sees drought is ‘game-changer’ for Argentina

International Monetary Fund spokesperson gives little away about talks over redrawing of multi-billion-debt deal in wake of historic drought, rebuffing questions from reporters over whether delivery of funds will be brought forward.

Economy Minister Sergio Massa says that “everything is on the table” in Argentina’s ongoing talks with the International Monetary Fund, including the bringing forward of disbursements of funds assigned in the nation’s multi-billion-debt programme.

Argentina and the International Monetary Fund are currently negotiating adjustments to the crisis-hit nation’s record US$44.5-billion extended fund facility deal in the wake of a historic drought that is set to shave billions of dollars off the country’s gross domestic product. 

Details of potential changes to the programme are few and far between, though Massa is seeking to bring forward planned disbursements of funds that could boost Central Bank reserves.

During a press briefing to reporters in Washington on Thursday, IMF Spokesperson Julie Kozack gave little away. Responding to questions from journalists, she described the talks as “constructive” and refrained from detailing key aspects of the negotiations.

"We have been working closely with the Argentine authorities in the context of the programme, to address a very challenging and complex situation," said Kozack, an ex-deputy director of the IMF’s Western Hemisphere Department and former lead negotiator on Argentina’s record credit-line.

"Constructive discussions are taking place virtually and we will communicate the outcome of these discussions,” she added.

Pressed once again about the possibility of advancing the scheduled disbursements outlined in the existing deal and the potential readjusting of targets on Argentina’s fiscal deficit and Central Bank reserves, Kozack again refused to provide further detail. 

The spokeswoman said the deal’s next review would take into account the impact of the drought and seek to strengthen the programme, adding that the results of the negotiations would be known in the coming days. 

According to Kozack, talks are revolving around targets for the first quarter of 2023, the fulfilment of which would generate the next disbursement to Argentina, currently scheduled for June.

Reports in Argentina say the government is requesting that up to US$10 billion of disbursements be advanced, but that the IMF is seeking a greater fiscal adjustment and commitments on interventions to prop up the currency as part of any updated agreement. 

The current programme is designed in such a way that the multilateral lender makes disbursements after Argentina has paid down maturities. Hence if payments are brought forward, it will be necessary to define how future obligations will be met.

Bloomberg reported last week that the US President Joe Biden’s government is willing to sign-off on such a deal. The United States is the largest stakeholder on the IMF’s board.

Speaking at this week’s AmCham summit in Buenos Aires, Economy Minister Sergio Massa slipped into a brief bit of English, revealing that IMF staff had recognised that the punishing drought is a “game-changer” for Argentina that “forces us to rethink everything.”

“We will adjust the programme, rather than do a new one and have to go back” to Congress and the IMF’s executive board to receive approval, Massa told an audience of political and business leaders in Buenos Aires.

Echoing Massa’s claim, Kozack said Thursday the IMF recognised that the economic situation had been “exacerbated by the historic drought that Argentina is facing.”

The remarks came hours after the Rosario Stock Exchange released a report that trimmed soybean crop projections to 21.5 million tonnes from the previous 23 million tonnes.

Quizzed by a moderator on Tuesday about what exactly the talks were addressing, Massa’s response was plain and simple.

“Everything is on the table in the discussions with the Fund,” he declared.




More in (in spanish)