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ECONOMY | 09-05-2020 07:57

IMF ‘stands ready to help Argentina’ through ‘difficult times’ ahead

Fund spokesperson Gerry Rice ‘hopeful’ deal can be reached with creditors to avoid default.

The International Monetary Fund (IMF) says it is ready to help Argentina through the “difficult times” that lie ahead, Fund spokesperson Gerry Rice told reporters on Thursday.

"We stand ready to help Argentina," Rice said during an online press briefing, adding that the Fund was not directly involved in negotiations with creditors to restructure more than US$65 billion in public debt.

Nevertheless, the spokesman said the IMF was “hopeful that an agreement with high creditor participation can be reached," one that would “restore sustainability” amid the coronavirus pandemic.

Argentina has been gripped by recession for two years. GDP contracted by 2.2 percent in 2019. During a currency crisis in 2018, the Mauricio Macri government tapped the IMF for the largest credit-line in the Fund's history, worth some US$57 billion. The country has received US$44 billion to date. 

The Fund has been supportive of the Alberto Fernández administration to date. IMF Managing Director Kristalina Georgieva has said that "substantial relief" from private creditors would be necessary in order for Argentina to grow.

Interest paid to IMF

Underlying improved ties with the Fund, and while the government was telling creditors to take a haircut on their bonds, it emerged that Argentina had made a US$320-million payment to the IMF this week.

A Central Bank spokesperson confirmed that the payment had been made to Bloomberg. Under the current scheduled, agreed before the coronavirus pandemic and the government’s debt-swap offer, additional payments are due in August and November.

Amid talks with private creditors, Argentina is seeking a new programme with the IMF to replace the existing one. Before the country can receive a revised loan offer, the Fund must complete a key periodic review known as ‘Article IV.;

Although that was first discussed at a G20 meeting in February, Argentina and the Fund have yet to make progress on the review, according to a person close to the process who is not authorised to speak publicly.

Paris Club payment

Earlier this week, Argentina’s postponed a US$2.1-billion payment to the Paris Club group of creditors after requesting a delay.

"There has been understanding. This is within the framework of the agreement, there was no obligation to pay. There is receptivity after having requested it in a timely manner," said a government source, in comments reported by the AFP news agency.

"There is time until 2021 to reach an understanding" with the Europeans, the source added.

Argentina was due to make a US$2.1 billion payment, or at least a portion of it, on Tuesday under a refinancing contract signed in 2014. 

– TIMES/AFP/BLOOMBERG

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