After holding negotiations for almost two months with the economic team of Argentina and when the date of an important expiration approaches, the International Monetary Fund disappoints the urgencies of the Government and does not issue any sign that it is close to an agreement with our country to get out of the deep crisis, although it points out that they are working on "alternatives" to strengthen the program.
There is also no news about a possible visit by Minister Sergio Massa to Washington to close a new deal. There was expectation in the Economic team that the Fund would announce this Thursday some tentative schedule or set a closing date, but it was not so.
At a news conference in the U.S. capital, Julie Kozack, the Fund's communications director, said Thursday that Argentina's situation is "very complex" and "very difficult," exacerbated by the historic drought.
He pointed out that the IMF and the Economy Ministry "have worked a lot together" and that "negotiations continue," focused on the approval of the 5th review of the program.
The official took several questions about Argentina's negotiations, but answered by sticking to a script under the usual formula of "constructive talks."
"The focus of the talks around the fifth review has to do with alternatives to strengthen the authorities' program while recognizing the impact of the drought on the economy," Kozack said.
"This includes policy talks to safeguard stability, improve fiscal sustainability, and strengthen reserves in the country. All these issues are essential to reduce inflation and ultimately to protect the most vulnerable in society who are often the most affected by these economic difficulties," he added.
"The teams continue to work constructively. They are having frequent conversations and the goal is to make progress with the program. We will let you know when there are more details. These talks are taking place and we don't want to get ahead of anything, but we'll tell you the details when we have them."
So far the negotiations are being held by Zoom. Asked if any face-to-face meetings were expected, she was also evasive: "We hope there will be personal meetings at some point."
With two weeks to go before the maturity of $2.700 billion with the Fund, Minister Sergio Massa is delaying his trip to Washington to close the deal he originally planned to seal at the end of April, 15 days after the easing of the program due to the drought was announced.
The days went by, the negotiations continued via zoom, but the final signing of the new program has not yet arrived and the minister's trip is being postponed. When he returned from China last Friday, he said he would travel "in 10 days."
On Wednesday there was already talk that it would come rather close to June 20 or 21 – after the inauguration of the Néstor Kirchner gas pipeline – only if the agreement is ready. Before, the technical officials of the Economy, Leonardo Madcur and Gabriel Rubinstein, would travel to finalize details. "The team travels when we close virtually successfully, that you travel and they begin to run the bow, with me it does not go," was the order that the minister lowered, they said in Economy.
Between June 21 and 22, the government must pay $2.100 billion to the Fund and must complete payments of $1.020 billion to private bondholders by August. Although the Government seeks to put pressure to close, it is known that for the Fund it is not a date marked in stone. They have already postponed maturities other times and are not going to hurry to close an agreement that they have to modify soon. In addition, the agency's technicians have to try to convince the board – where the country directors are – that it is a viable path.
Massa wants the Fund to advance the disbursements corresponding to the maturities until December (US $ 10,700 million) due to the impact of the drought, which caused the country to lose some US $ 20,000 million in exports and because they clearly cannot pay because there are not enough reserves in the Central. It also seeks approval from the agency for a certain amount so it can use them to contain the dollar.
The spokeswoman was also asked if they supported the possibility of a new bond swap. "With respect to the debt swap, what I can tell you is that we welcome the authorities' efforts to reduce the risks of domestic debt rollover while ensuring that these operations are conducted in a way that protects debt sustainability and does not contribute to vulnerabilities in the future. The efforts are part of our ongoing discussions with authorities."
Kozack also answered a question about the IMF's policy of surcharges. It is a constant demand of Argentina that these be made more flexible, although the board has already formally opposed that issue.
"Views on surcharge policy continue to diverge. The dialogue on surcharges is expected to continue with the objective of greater convergence of views. A broad consensus of member countries is needed to make changes to the flight attendant policy and 75% of the voting power of the executive board is needed," Kozack said.
