Argentina needs the dollar while Alberto Fernandez says the IMF loan is threatened

The favorite to be the next leader of Argentina claimed that a loan from the International Monetary Fund (IMF) could not be repaid.

Argentina's assets went into a crater last week after a shocking preliminary poll that a leftist candidate, Alberto Fernandez and former President Cristina Fernandez de Kirchner, would win the elections in October and defeat the current leader, Mauricio Macri.

In particular, the bond and currency markets reflected investors' discomfort with the abandonment of Macri's market-friendly policy agenda. Mr. Macri borrowed $ 57 billion from the IMF last year to agree on the implementation of austerity measures to reduce the country's huge debt and to carry out the reforms. repayments.

In an article published on the weekend by the Clarin newspaper, Fernandez suggested that if he became a leader, he would seek to renegotiate the agreement.

"I would say that there is only one indisputable reality, namely that Argentina under these conditions is not able to repay the debts that are owed to it. she contracted, "he said.

The peso ended last week at more than 17.5% lower than the dollar, rising to 55 pesos against the greenback on Friday, despite the support of the country's central bank. On the same day, Fitch Ratings and S & P Global further degraded Argentina's debt, raising fears of sovereign debt default.

Monday morning, the cost of Argentine debt insurance via a CDS (credit default swap) over five years has risen by 319 basis points, according to specialist financial data IHS Markit. A CDS is a financial contract under which the seller of CDS will indemnify the buyer in case of default.

Meanwhile, the Argentine stock market was closed for a holiday Monday.

Fernandez told the paper that he would help Macri renegotiate the terms of repayment with the IMF, adding that the current conditions were "harmful" for the country.

He added that the relationship with the Washington-based institution should be replaced by that of "respect" and not "submission".

Fernandez said that as a leader, he would place strong emphasis on boosting exports in order to earn US dollars that can pay off the debt. He added that he would seek to negotiate repayment terms for investors who already hold debts issued by the Argentine government.

Hernan Lacunza replaced Nicolas Dujovne as Argentina's finance minister over the weekend, the latter taking advantage over the country's precarious finances.

Dujovne, who was the main negotiator of the agreement with the IMF, said in his resignation letter that it needed a "significant renewal in the economic field".

Lacunza, who held the post of Minister of Economy of the Province of Buenos Aires, officially took office Monday. Teneo Intelligence said in a note that it had two days to prepare for a visit from an IMF team on Wednesday.

Teneo's Latin American analysts have added that, if Macri was possibly looking to limit further changes before the October elections, the chief of staff, Marcos Pena, could be replaced by his role as director president's campaign.