Pending disbursement from the IMF, the Government initiates the payment to the Paris Club: how much will be paid to the main creditor countries

Within nine days, the Ministry of the Economy make the first payment to the Paris Club for just over $ 230 million, as agreed in the agreement announced by Martin guzman a little less than a month ago. This will be the first in a series of international debt maturities that are on the agenda until the end of the year and which will require a large portion of the central bank’s reservesl. In the meantime, the government is waiting for a disbursement from the IMF in the coming weeks to decompress this pressure on public funds.

The preliminary agreement reached by the Palacio de Hacienda with the Consortium of Creditor Nations involved a double payment of $ 430 million. The first of these currency transfers will take place on Wednesday July 28.. Through this agreement, the Government prevented the Paris Club from considering that Argentina was in default on July 30 for not having paid the $ 2,400 million that was still outstanding.

The preliminary agreement that the Palacio de Hacienda reached with the Consortium of Creditor Nations involved a double payment of $ 430 million. The first of these currency transfers will take place on Wednesday July 28.

The meaning of this consensus with the group of countries was that the Ministry of the Economy has a window of time until March 2022 to be able to finalize a financial agreement with the International Monetary Fund to replace the Stand-By signed in 2018. during government. from Mauritius Macri. Without this preliminary step, they admit in the Executive Power, there is no way to restructure this outstanding balance with the Paris Club.

The payment that the National Treasury will make on Wednesday of next week will not involve a challenge for the Central Bank’s reserves since it is a lower amount, but this will only be the first maturity of international organizations looming on the horizon until the end of the year: Along the way there are also two repayment schedules for the IMF loan in September and December which will be more expensive.

Debt: the outlook until the end of the year

A report from Congress Budget Office (OPC) analyzed the fine print of the agreement announced by Guzmán at the end of June and explained that “two partial payments are established, for a total amount equivalent to that of other bilateral commitments with third States over the period July 2021 – March 2022: approximately $ 231 million payable on July 28, 2021 and $ 199 million in February 2022 ″.

In this way, the government has tried to give debt with the Paris Club the same treatment as debt with other bilaterals – such as with China, with which Argentina has no payment restructuring negotiations. in progress -, which appeared to be one of the conditions required by the consortium of countries to agree to postpone the payment period and avoid the declaration of sovereign default.

Debt with the Paris Club involves 40 loans from official agencies in 16 countries, denominated in eight different currencies, compiled the OPC. Cumulative payments between 2014 and 2019 amounted to approximately $ 7,987 million ($ 6,694 million of principal, $ 846 million of base interest and $ 447 million of compensatory interest), while the remaining balance is currently at USD 2,437 million, including the principal balance. from May 2019 and interest capitalized in 2020 and 2021.

“If the target capital had been paid since the start of the device in 2014, the debt would have been paid in 2019, and it is estimated that the paid services would have totaled approximately USD 9,283 million”, Estimates the report of the study center which depends on the National Congress.

Next Wednesday’s payment will include the agency and credit bureaus of Germany, Austria, Belgium, Canada, Denmark, Spain, United States, Finland, France, Israel, Italy, Japan, Netherlands, United Kingdom, Sweden and Switzerland. The main creditors are Germany and Japan. In the first case, on July 28, the government will pay the credit insurance company just over $ 80 million. Euler Hermes and 2.2 million more at State Development Bank of the Federal Republic of Germany.

While Japan will receive 37.7 million Japanese Bank for International Cooperation, another 1.9 million in Japan International Cooperation Agency and $ 12.8 million to Export and investment insurance.

Next Wednesday’s payment will include credit bureaus and agencies from 16 countries: Germany, Austria, Belgium, Canada, Denmark, Spain, United States, Finland, France, Israel, Italy, Japan, Netherlands, United Kingdom , Sweden and Switzerland.

Other creditors like the United States will receive $ 14.5 million for Import-export bank, and 1.2 million for International Development Finance Corporation. With regard to Spain, the Spanish Export Credit Insurance Company will receive $ 9.4 million, the Official Credit Institute from Spain 4.7 million more and from the Spanish government 2.2 million more. The Netherlands will be creditors of $ 18.3 million towards Atradius, the government’s official export credit agency.

After this first stage of the debt maturity calendar, the most complex will occur between September and December, when the first key dates for repayment of the Monetary Fund’s credit begin to fall. According to information provided by the agency, September 22 and December 22 Argentina expected to repay nearly $ 1,884 million each time, which gives in total 3,767 million during this three month period.

But the account with the IMF is not limited to that. In addition, in early August and early November the country must disburse, on each date, 350 million more for interest on special drawing rights (SDRs), the currency of the Monetary Fund. Thus, between August and the end of December, the government is expected to send $ 4,467 million to the agency.

The bill It “matches” with almost exact precision the amount of foreign currency that the National Treasury will receive – it is expected – at the end of August from the IMF. They would hardly be more than $ 4.3 billion which correspond to Argentina for the participation of 0.7% that it holds in the board of directors of the organization. The recapitalization that the Fund will carry out among its member countries will amount to a total of $ 650,000 million.

The government will receive from the IMF a reinforcement of a little more than 4,300 million dollars which corresponds to Argentina for the participation of 0.7% which it holds in the board of directors of the organization.

Thus, by adding the minimum reserves of the Paris Club and the IMF, there would be a demand for foreign currency from the monetary authority of nearly USD 4.7 billion. The importance of these amounts implies pressure on the Central Bank, which during the first part of the year managed to accumulate reserves due to the liquidation of the agro-export complex and which, it is expected, will begin to be used during this second semester. 2021 to contain the kind of change and avoid tensions with the dollar ahead of the election.

In addition to the specific needs of the public sector to meet its debt commitments, there would be “dollarizing pressure from the private sectorAs the consultant Equilibra called it. In figures, it would be a request for 3.4 billion dollars in the coming months, which would represent no less than 83% of the $ 4,083 million in net reserves accumulated by the Central Bank until the end of June.

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