Argentina’s plea to IMF over debt is ‘tantamount to default’

ARGENTINA has begged the International Monetary Fund and bondholders to push back debt payments and extend maturities on its bonds as its new finance minister looks to contain an escalating economic crisis.

Hernán Lacunza, the embattled country’s finance minister, said the government wants to restructure its debt amid rising fears that it will default ahead of elections in October.

The measures would postpone payments on a total of $101bn (£82bn) of debt, including a large part of the $57bn bailout package agreed by the IMF last year.

“The priority today is to guarantee stability because it is useless to launch reactivating measures if there is no stability. The first thing is to recover that stability,” Mr Lacunza said at a press conference.

The lender of last resort is “analysing” the proposals following talks with the crisis-hit government and vowed to “stand with Argentina during these challenging times”.

Argentina has defaulted on its debt eight times, most recently in 2014. The country is in a deep recession, inflation has surged to eye-watering levels and the peso has plunged to record lows, almost halving in value in the last 12 months. Edward Glossop, economist at Capital Economics, said the decision to ask for restructuring was “tantamount to default” because the country’s debt is unsustainable and the government was effectively admitting that.

“We could get a relatively swift deal with bondholders in the near term but it is not clear whether that would be enough to restore debt sustainability,” he explained.

“Reading between the lines it probably is being led by the IMF given the fund is in Buenos Aires at the moment discussing the latest disbursements.”

Market volatility in Argentina has been stoked in recent months by concerns that centre-right president Mauricio Macri will be ousted in October’s vote and replaced by the populist, Leftist opposition.

Markets were shocked by the extent of Mr Macri’s defeat in a primary election earlier this month ahead of the main vote. Argentina’s bonds have plunged in recent weeks over fears of another default.

Cristina Fernández de Kirchner, the former president who is running as the opposition’s vice-presidential candidate, had a fractious relationship with foreign investors. Her eight-year presidency, which ended in 2015, was plagued by currency controls, bogus inflation figures and corruption charges.