By Andrea Shalal WASHINGTON (Reuters) - Discussions between the International Monetary Fund and heavily indebted Argentina are going well and will continue in coming days, IMF spokesman Gerry Rice
February 27, 2020
By Andrea Shalal
WASHINGTON (Reuters) – Discussions between the International Monetary Fund and heavily indebted Argentina are going well and will continue in coming days, IMF spokesman Gerry Rice said on Thursday, as Argentina races to restructure around $100 billion in debt.
Argentine Economy Minister Martin Guzman and his team met with IMF staff in Washington on Monday, Rice said, following a meeting with IMF Managing Director Kristalina Georgieva in Riyadh during a meeting of G20 finance officials, where Guzman said Argentina would initiate Article IV consultations that could pave the way for a new IMF program.
“The discussions are going well and we expect that to continue in the coming days,” Rice told reporters at a regular IMF briefing, describing the current state of talks with Argentina’s new Peronist government as “very constructive.”
The IMF last week said Argentina’s debt situation was unsustainable and urged Buenos Aires to draft a definitive plan to restore debt sustainability, including a “meaningful contribution from private creditors.”
The Latin American country, which has defaulted on debt obligations eight times so far, is facing tough negotiations with creditors and the IMF to restructure around $100 billion in debt that the Argentine government says it cannot pay unless given time to revive stalled economic growth.
The IMF gave Argentina a $57 billion standby financing agreement in 2018, but that program was agreed by the previous government and has been essentially on ice since the election.
Fitch Ratings said on Thursday Argentina needed significant debt relief to overcome its solvency and liquidity challenges, but said potential disagreements around the type and magnitude of debt relief needed, and how much fiscal tightening is realistic, could make it tough to reach consensus on a path forward by the end of March, as Argentinian authorities intend.
Atradius, a global credit insurer, agreed the timetable was highly ambitious especially since the process was moving so slowly, and said the risk of a disorderly debt default remained high.
In a report, Atradius said the new administration faced a difficult balancing act between its campaign pledges promising no more austerity measures, and investor demands for a clear macroeconomic plan to improve long-term sustainability.
It warned that a disorderly default would undermine efforts to revive the economy and rebuild confidence, and could return Argentina to the “pariah status” it had international capital markets between 2001 and 2014.
(Reporting by Andrea Shalal, Editing by Franklin Paul and Richard Chang)
