Mary Church
08/08/2020 - 22:12
- Clarín.com
- Economy
- Economy
The main challenge for which Martín Guzmán returned to Argentina was to resolve the debt restructuring. After several years in the United States, on December 10, in Buenos Aires, he began his work as Minister of the Economy. After almost eight months of that beginning, it closed a chapter with the agreement with the main investment funds with Argentine bonds.
In an interview with Clarín and other media from his office in the Palacio de Hacienda, already more relaxed with the agreement for the exchange of US $ 64.8 billion under way, he reviewed the last days of negotiations and spoke about the economy for the coming months.
- What aspects are missing in the renegotiation of the debt with the bondholders?
- They are logistics issues. As for the concepts, they are agreed economically and legally as well. In the latter, we seek that it is not a matter that Argentina decides with its creditors, but that it is the international community itself that endorses and pushes contractual innovations . We hope that what remains can be resolved as quickly as possible so that the 24th can be the closing date, but these are processes in which there are multiple parties involved.
- You said that you expect a high participation in the exchange, what percentage is possible to reach?
- It would not be wise to give numbers; there is an open subscription period. But yes, we hope that there will be a higher percentage for the activation of the collective action clauses. The accompaniment is proving massive. Outside of the three groups we agreed with now, there was already an accompaniment. Now we add to the majority group.
"I spoke several times with Cristina Kirchner. There is a space for reflection that is very valuable. The Monday prior to the agreement I also had a talk."
- Can you expect more than 80%?
- They can do accounts. Our intention is that it is the largest possible participation. That would be good for all parties.
- After the announcement, there were a few calm days in the dollar but there was an overheating at the end of the week. Why did this happen?
- It is not an overheating what happened in the last days. It is a positive sign: there are investors who, as they see the exchange as very positive, then buy the bond in dollars that is used in cash with settlement and then exchange it for a bond in pesos . When it is made in exchange in dollars under local law, that is reversed. We are going to be left with more pesified debt. An arbitration is taking place. For the economy it is positive. It is a transition that is later ordered.
- He also said that exchange controls may be relaxed at some point. We are far?
- We always said that exchange controls were a decision made by the previous government in a situation of extremely high economic anxiety. Argentina has to move towards a more reasonable capital account regulation scheme. But in order to normalize, you have to build resilience: this is achieved by accumulating reserves and it is not achieved overnight; it takes time .
- How did you take the result of the debt swap on a personal level?
- The most important thing on a personal level was when the president decided to trust our team to be able to lead this process of solving the debt crisis, which was very deep. It gives us a lot of peace to be here. It was a very important, historical responsibility, in which the stakes were high. We knew that the negotiations were going to be very tough. From the inside you already know how you are going to continue. The outcome was something that, in some sense, he expected. There were several moments of tension, which we knew were going to be there and we even generated them, as well as the creditors. Clear signals were given down the stretch, which were believed, that helped put an end to this.
"In 2021 there will be a primary fiscal deficit that respects the needs of recovery. Public works will play an important role, housing plans will also"
- Did you speak with Cristina Kirchner?
- Yes, I spoke to her several times. There is a space for reflection that is very valuable. That Monday I also had a talk. As with the President, there are many things that are discussed and that remain inside. But there is a very valuable area of reflection .
- Do you take it as a personal achievement?
- No. The main achievement is the country. And as for figures, it belongs to the President: he opted for this path. The great credit goes to the President.
- When do the discussions with the IMF begin and by when do you expect to have the program ready?
- We are at this moment in a procedural matter to settle for the beginning. We will start soon. The matter does not necessarily have to be closed with private creditors. It will take time because to do it well you have to involve society as a whole, which is legitimized by Argentine society. It will be very different than the one that was under the previous government. We are going to put economic recovery at the center.
- It is always said that the program is from Argentina, what degree of freedom can be had in the layout? Do you think there was a change in the IMF with the change of figures?
- We do not doubt that the previous one was one designed by the Argentine Government, but it did not work. Not that the IMF imposed it. Now we are looking for the same, but what has changed? The Argentine Government. Obviously also the change of leadership at the IMF, the inauguration of Kristalina Georgieva also brought fresh air to the relationship.
- Will new funds be sought with the IMF?
- We are looking with the IMF for the equivalent of a refinancing. New funds no. We are open to all possibilities regarding the scheme .
- In the assumption in the negotiation with the creditors it gives the feeling that you would go through a line of extended facilities.
-It is not defined. All the possibilities are on the table. The review of the Argentine economy, article IV, we had requested but due to the coronavirus it was suspended.
- Months ago I estimated a drop in GDP of 6.5% for this year. Was that figure revised?
- The figure is revised. It will be presented when we send the Budget 2021 project. We have been working with short horizon forecasts. Inflation is falling, in a context still of recession. The Budget Law 2021 will include a series of measures within a framework of fiscal and monetary consistency, under the objectives of economic recovery. Beyond the fact that the speed of recovery will depend on how the pandemic evolves, Argentina has the conditions for 2021 to be a good year.
- Of the measures that were taken for the pandemic, how much will remain as permanent?
- We separate three blocks of spending: the one to deal with the pandemic situation, capital spending, and the rest. By 2021 there will be a central role for the State in the recovery , accompanied by the private sector, so that it faces more dynamic situations. Understanding that there has to be a path to an order of fiscal accounts, that is not something that can be achieved overnight either. In 2021 there will be a primary fiscal deficit that respects the needs of the recovery . Public works are going to have an important role, housing plans also, because they generate employment and economic activity, precisely in the private sector. All the impulse to the domestic market will play an important role , at the same time that it will be taken care of so that exports grow. Work is also being done to redefine the rules of the game for the energy sector.
- With the utility rates frozen, it begins to become more flexible with gasoline. Will there be more increases?
- The issue of rates must be resolved in a comprehensive manner, maintaining certain balances that were not sustained during the previous administration. But now we are in an emergency that, as soon as it yields, there will be a definition on rates. There is the strategic role that YPF has to play for the development of the energy sector in Argentina. YPF's numbers are really dramatic , what happened in the previous four years: there was a drop in all indicators.
- Will there be fuel increases?
- It's a company decision. It is not decided. Decisions are made in the context of pricing policies. And all policies are taken in a larger context.
- Do you see hyperinflation risks?
- No.
- There was a loss of purchasing power in recent years. Some recovery was expected for this and the pandemic impacted. What prospects can you have?
- We see a better 2021. The recovery of the real wage is something that occurs when the economy recovers . They are two things that go hand in hand.
