IMF, Argentina to negotiate debt letter of understanding from next Monday

The International Monetary Fund (IMF) confirmed to government that next week, the technical agreement will begin to be negotiated face to face with the Pink house, official sources informed TN.

Officials from the Ministry of the Economy and the Central Bank will travel to Washington this Saturday to meet with officials from the International Monetary Fund.

The government and IMF technical staff are seeking to speed up a deal before the end of the year. The visit to the USA by the Argentine mission goal to finish defining the last details to a letter of intent agreement debt restructuring. Technical discussions will officially start on Monday 6.

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For the IMF, two important figures in the negotiations are Julie Kozak and Luis Cubeddu. “The objective is to continue to advance in the technical agreements within the framework of the negotiations with this multilateral credit organization for a program which makes it possible to refinance the loan contracted in 2018”, they explained from the Ministry of the Economy. .

The IMF’s objectives in the negotiations with Argentina

As reported from Casa Rosada in TN, the authorities of the Fund, which Kristalina Georgieva, will seek during the visit to close the technical aspects of:

  • Constitutive Act : Where the policy adjustments that the government establishes are contained, it will do to overcome the problems that led it to seek financial assistance and which also serve to ensure that the country will be able to repay resources to the IMF.
  • Letter of Intent : where a more detailed explanation is given in a “memorandum of understanding” between the IMF and the country and which must be approved by the agency’s board of directors.

Government negotiation with the IMF for the US $ 44,000 million debt

As reported TN, the negociation for a new business entered additional time. Occurs at times when reserves The international accounts of the Central Bank are located below deadlines which the country must face until March, according to various economists.

the negociation indicates an extended 10-year facility plan with a little more than 4 grace, with what the country would start paying around 2026. Although it is pending whether or not there will be a reduction in the surcharge.

The times are pressed: there is a 20-day window before the break for the end of year celebrations at the IMF. The Minister of the Economy, Martín Guzmán, has daily contact with the technicians of the international organization.

Before Christmas, we estimate the board of directors will meet The bottom. In this case, not only the fate of the agreement can be defined with the country but will also analyze the local demand that the G20 has gathered to review the surcharges charged to countries like Argentina.

For him 22 december, meanwhile, expires second installment of the loan principal, for approximately 1900 million dollars. From the Casa Rosada, they have ratified that it will be paid with the “pandemic funds” issued by the IMF last August.

BCRA reservations precipitate need for IMF deal

With a more reinforced stock, after the ban on financing tourist spending abroad in installments, the central bank (BCRA) realizes that dollars are not enough on all fronts, according to various economists.

Measure it was justified on two fronts: responds to the need to come to an agreement with the IMF since the dollars available are invested in production, which requires imported inputs to maintain reactivation.

According to the calculations of the consulting firm Ecolatin, available reserves by the end of the year will be below 4000 million dollars, considering gold (90% of the total), excluding SDRs (the special drawing rights granted by the organization as part of its assistance to its partners to emerge from the pandemic) and the payment of 1.9 billion euros dollars to the Fund.

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This level is on schedule between January and March, which total approximately US $ 5 billion until the middle of this month and another US $ 1.9 billion is extended by March 31, at which point if there is no new deal, the deadline set by the Paris Club expires. .

Argentina faces the following deadlines debt in foreign currencies only in the first quarter of 2022:

  • January 9 a coupon expires interests obligations of the to exchange (private creditors) by 690 million US dollars;
  • January and February : two payments to the IMF for almost 1000 million US dollars.
  • Objectives of February, 195 million dollars at the Paris Club due to the postponement of the expiration date which worked in May 2021.
  • At March, 2,901 million US dollars to the IMF.
  • Also in March, $ 1.9 billion at the Paris Club (for payment not made in May, although this amount can be rescheduled if there is an agreement with the IMF).

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