The Minister of Economy, Martín Guzmán, will travel to Washington in the second half of March with his sights set on being able to negotiate an agreement with the IMF with more accessible conditions, so that Argentina can comply with the commitment to pay the US debt. $ 44,000 million contracted by former President Mauricio Macri.
It will be under the guidelines set forth by President Alberto Fernández earlier in the week at the opening of the ordinary session in Congress, where he said that negotiations will be carried out with the Fund “without hurrying” and in a framework of “dialogue and respect” with the international community.
In this framework, Guzmán will seek to renegotiate various terms of the agreement reached in 2018, with the aim of making its conditions more flexible and also agreeing on realistic goals of “convergence” of the fiscal and monetary gap to achieve a recovery of reserves, a sustainable debt and inclusive growth.
To establish a new agreement, not only is the extension of terms at stake but, as a novelty, it will also try to put on the table the request for a reduction in the financial surcharge suffered by the country, after having requested in 2018 a loan considered of exceptional character.
Strictly speaking, the Fernández administration will seek to assert in the negotiations that the 2018 agreement was a “political agreement” and that it “violated the IMF statute,” as the President denounced this week before Congress.
With this slogan, Guzmán will seek to meet with the head of the Fund, Kristalina Georgieva, and with officials from the US Treasury, on an agenda yet to be confirmed.
“The date or the modality of the visit has not yet been defined,” they indicated from the IMF, which awaits the arrival of the Minister in mid-March.
In the meantime, a discussion is taking shape in the G20 about providing the IMF with “more tools” to alleviate the crisis, and that could benefit Argentina’s position in the negotiations with the multilateral organization.
One of them is the request to reduce the costs of surcharges for requesting exceptional loans, in the context of the pandemic, in line with the Argentine proposal.
In this regard, Guzmán formally expressed to his G20 peers at the meeting that took place last week, requesting that the IMF review and modify the surcharges that it applies to the credits it grants on the basic interest rate.
According to Guzmán, “the IMF loan is so large that its sustainability in a short period of time is difficult. We are working in conditions so that the interest rate is the best possible, and it is something that I raised in the G20, which is the reduction of the cost overruns in the IMF interest rate, “he said in television statements,
In the same vein yesterday, Kevin Gallagher, director of the Center for Global Development Policy at the School of Global Studies at Boston University, who also serves as co-chair of the Think 20 Working Group on International Finance of the G20 of Italy, published an article in the Financial Times newspaper in favor of this position.
Gallaher argued that “the IMF’s current mechanism to add surcharges to debt interest costs on its loans should be abandoned to aid global economic recovery.”
According to the economist’s calculations, “the countries that most need the IMF will have to pay more than $ 4 billion in additional surcharges, in addition to interest and fee payments from the beginning of the crisis until the end of 2022,” Gallagher said.
This includes countries such as Georgia, Angola and Argentina, which already had an exceptional loan, as he explained, to which will be added from now on the surcharges that will be charged to emergency loans for more than US $ 100,000 million granted to 85 countries by the Fund since the pandemic began.
Gallagher said that “the IMF estimates that surcharges have become the Fund’s largest source of income, representing almost half of the income during this period,” since the crisis broke out last March.
One of the causes of this is because “these surcharges can often lead to the cost of debt to triple,” warned the Boston University finance expert.
Minister Guzmán warned that the surcharge policy applied by the IMF “is uneven, because it disproportionately affects emerging and middle-income countries with the lowest quotas, and is pro-cyclical, because it imposes tougher conditions on countries that have the lowest quotas. more adverse market conditions, “for which he asked his G20 peers that said policy be reviewed.
The G20 also instructed the IMF to take action to “formulate a proposal for a general allocation of SDRs” (Special Drawing Rights), and to “continue with the debt suspension initiative for poorer countries” while it lasts. the pandemic, among other initiatives, also in line with the proposal of the Argentine Government.
Guzmán said that “Argentina fully supports a new general allocation of Special Drawing Rights, which will provide funds for urgently needed low- and middle-income economies.”
In particular for the country, it may represent an injection of some US $ 3,300 million in reserves, and that the initiative that is being considered, according to the Italian government, is to issue an amount of 350,000 million SDR, which is equivalent to about US $ 500,000 million and Argentina participates with a 0.7% share.
The initial intention of the Argentine government was to reach an agreement in May, in order to obtain the key to a renegotiation of the maturity of US $ 2.8 billion with the Paris Club.
However, if the negotiations require it, the Government assured that it will not rush the times, prioritizing a good agreement with the IMF.
(Télam)
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