Cristina Fernández de Kirchner marks the limits of Argentina’s negotiations with the IMF | International

Argentine Vice President Cristina Fernández de Kirchner continues to corner President Alberto Fernández. He is now pushing for the payment of debts to the International Monetary Fund and the Paris Club to be suspended, at least until the pandemic is over. The power of the former president and current vice-president seems to be growing day by day, while the president’s popularity is at an all-time low: according to various polls, nearly 70% of citizens reject his leadership.

The economist and deputy Fernanda Vallejos, very close to Cristina Fernández de Kirchner, was the promoter of the so-called Proclamation of May 25 (National Day in Argentina), signed by more than 2000 politicians, judges, trade unionists, artists, journalists and even a businessman. Under the title First health and life, then debt, the proclamation affirms that Argentina is in “a state of necessity which prevents it from meeting the debt commitments contracted, in particular with the IMF and other organizations, under the risk of harming interests superior to that of the country. “State must protect in a context of pandemic: social vulnerability, health, work, education and housing”.

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“It’s an unsustainable debt,” says Congresswoman Vallejos, for whom the suspension of payments need not necessarily imply a default if previously agreed with the IMF. However, this pact appears highly improbable, because Kirchnerism wishes to avoid compromises (and possible budgetary sacrifices) before the legislative elections in November.

The difficulties highlighted by the proclamation are true: 42% of the urban population lives in poverty and the worst moment of the pandemic has been reached, the hospital system being almost saturated. But Alberto Fernández and his Minister of the Economy, Martín Guzmán, have pledged to continue paying the debt installments until a restructuring is agreed. The day after the proclamation was released, the president held a videoconference meeting with German Chancellor Angela Merkel, during which he asked for help in negotiations with the IMF.

A critical moment comes on Monday at the end of May: a debt of $ 2.4 billion with the Paris Club expires. After expiration, a period of 60 days is opened, after which, if Argentina does not pay, it remains in default. Minister Guzmán tries to get an arrangement that gives him more time (the default this would imply an automatic recharge of interest of nearly 2,000 million), but its credibility was weakened by the pressure from Kirchner. This is something MP Vallejos denies: “On the contrary, what we are doing with the proclamation is to support the government and Minister Guzmán”.

Things are interpreted differently at the IMF. Alejandro Werner, head of the institution for the Western Hemisphere, said weeks ago that there were clear differences within Argentina’s governing coalition and “uncertainty” over the management of economic policy. Guzmán’s weakness manifested itself in April, when he wanted to sack Energy Undersecretary Federico Basualdo because he was opposed to the sharp increase in energy tariffs envisaged by the minister. Kirchnerism disowned Guzmán and put an end to the dismissal. Basualdo, for the moment, is still in his office.

The differences are obvious. While Kirchnerism demands more social spending and “money in Argentinian pockets” in the face of the electoral campaign, the Ministry of the Economy is leading a silent adjustment process. So far this year, social spending has grown at an annual rate of less than 30%, against inflation of 46%. Analysts estimate that at the end of the year the deficit could be well below the 3% forecast in the budget. However, the word “adjustment” is never spoken. It’s a taboo term for Cristina Fernández de Kirchner.

In what does not belong to Minister Guzmán, Kirchnerism predominates. Meat exports were suspended for a month, in an anti-inflationary measure that had already been tried, without much success, under the presidency of Cristina Fernández de Kirchner. The lawsuit that the previous president, Mauricio Macri, brought in The Hague for alleged human rights violations in Venezuela has been withdrawn. And the UN demanded, along with Venezuela, Cuba and Bolivia, that Israel’s actions and not just those of Hamas be investigated.

The big question now is whether Kirchnerism really intends to repay the debt of 46 billion dollars with the IMF or if it prefers a few years in default, as was the case after 2001. Cristina Fernández de Kirchner has repeatedly called for a “small gesture” from the Fund, but it makes almost unaffordable demands: a reduction in interest, currently 3% per year, which Washington rejects for the moment, in particular the extension of terms to 20 years, against the maximum of 10 years set in the IMF’s internal regulations. It puts a lot of tension on the rope.

Alberto Fernández, the moderate who allowed Peronism to return to power despite the strong rejection of his candidate partner (in reality it was Cristina Fernández de Kirchner who nominated him in 2019), is trying to find a balance. “The truth is, I’m not that submissive, and Cristina isn’t making four cries,” he told a radio show this week, insisting the two get along “much better” than ‘we do not say. And he repeated, as during the electoral campaign, that they were condemned to understand each other because the division would mean a defeat against Macrism: “With Cristina it is not enough and without Cristina it is not possible”.

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