How Important Is a New Deal With the IMF for Argentina?
Argentina’s government will seek an Extended Fund Facility from the International Monetary Fund, Economy Minister Martín Guzmán said Nov. 9. The new program would update a $57 billion agreement with the IMF that failed to prevent the country’s fall into a recession and a sovereign default. How important is a new deal with the IMF to Argentina’s economy, and what would a good deal for Argentina consist of? What would an agreement mean for investment in Argentina? What would the IMF likely require of Argentina in order to strike a deal, and would changes required by the IMF get adequate political support in Argentina?
Claudio Loser, president of Centennial Group Latin America and former head of the Western Hemisphere Department of the International Monetary Fund: “A new agreement would be Argentina’s 12th with the IMF since the mid-1980s, a record for the region. This agreement is crucial to consolidate Argentina’s financial sustainability, and it would help build confidence about its economic policies, creating the basis for renewed official and private flows. Within an Extended Arrangement, the Fund may offer financing that effectively restructures obligations for the next three years ($44 billion) and extends payments for up to 10 years. Given its multilateral nature, the IMF cannot provide debt forgiveness to Argentina, with a high, even though declining, per capita income. Financial support is granted only in the context of an economic program. The IMF strongly supported Argentina in the private debt renegotiation process and agrees that the fiscal adjustment should be gradual, given the Covid pandemic. The government has announced a…”Read More
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