Argentina asks for new IMF plan to replace $57b deal
Argentina's government formally requested negotiations to begin with the International Monetary Fund on a new program to replace a record $57 billion agreement from 2018 which failed to lift its crisis-prone economy.
Officials called for the beginning of consultations ahead of a program that will address $44 billion in payments owed to the multilateral lender as part of its previous arrangement that was never fully disbursed, according to a letter sent to IMF Managing Director Kristalina Georgieva and posted on Twitter.
The government praised the IMF for a "constructive relationship" so far and said it wants the new program to avoid the pitfalls of the past one.
The negotiations
will mark another chapter in a difficult relationship. The new agreement will be the country's 22nd with the IMF, and has often marked the prelude to deeper economic crisis. The Fund is historically villainized in Argentina and the most recent deal only fueled the fire.
"It is essential that an accurate assessment of Argentina's challenges be made, and we look forward to exchanging views with your staff on these issues," according to the letter, signed by Economy Minister Martin Guzman and Central Bank Chief Miguel Pesce.
The move also comes as Argentina nears the final stage on a $65 billion debt restructuring with private bondholders after more than six months of negotiations. Creditors have until August 28 to accept an offer valued at an average 55 cents on the dollar.
That deal paves the way for the government to kick off talks with the IMF. "This is a welcome step in the right direction, but it's only the beginning of a negotiation that could prove to be challenging and long to finalize," said Pilar Tavella, economist for Argentina at Barclays Plc. "The government will seek to limit conditions on economic policy in the midst of this year's deep recession."
The govt aims to reach an agreement before April, so that it has enough time to renegotiate a $2 billion payment owed to the Paris Club that cannot be addressed without an existing IMF plan, Bloomberg News reported earlier this month.
In a statement Wednesday, Georgieva acknowledged that the IMF had received the government request and said she spoke to Fernandez about "the need to reinvigorate the economy" among other topics.