Alert in case of difficulty repaying a loan to the IMF

Since the middle of last year, the IMF has disbursed about 45 billion US dollars, or 80% of to be listening 57,000 million US dollars have been accepted. In addition, if the fiscal targets are met, the multilateral agency will provide US $ 5.5 billion to our country by the end of the year. As a result, nearly 90% of the loan will have been transferred. it will be time to think about its repayment.

"Between 2022 and 2023, our country should return to the IMF more than US $ 46 billion between capital and interest, which represents 5% of GDP each year. If we add to that the bond payment schedule for those years, the amount almost doubles. As a result, the national government is expected to face deadlines close to a tenth of GDP in 2022 and 2023, "says the consultant's report.

"Although the current situation close to the primary balance of the national public sector reduces the need for new commitments, it will not be enough to generate surpluses of this magnitude to meet these commitments. Soa significant portion of the liability needs to be refinanced", The survey continues.

On this last point, Ecolatina specifies that most of the commitments are denominated in foreign currency: "Thus, if the national State does not obtain these dollars, it may have to buy them on the local market, which adds a factor of additional pressure at the exchange rate ".

In this way, to reopen access to private financing "it will not be enough to do it right", but it will still be necessary to see how to repay the multilateral agency.

For this, the Fund itself has a modality: Expanded fund service (or Extended fund mechanism, EFF). It is organized with countries that have balance of payments problems, that is to say a shortage of foreign currencies, as is the case in Argentina, and focuses on solving the problem. The country's inability to generate net currencies and public sector problems. to buy them

In addition, although its contribution is generally lower than to be listening it does so for a longer period (four years) and with a longer repayment period (up to ten years after the finalization of the disbursement). For this reason, projects are subject to quantitative criteria, such as budgetary targets, but also to the application of certain policies (landmarks Structural Funds) that contribute to stabilizing macroeconomics.

Given the current situation in our country, it is likely that the next president-elect will have to move forward in this pattern. It is time then to see how the countries that needed a FEP anticipated what could happen to Argentina in the short term.

From 2002 to date, the IMF has signed 31 FEPs. The largest of these was concluded with Greece in 2012 and for an amount of 33 000 million dollars (after a to be listening $ 37 billion), in a joint package with the European Central Bank and the European Economic Commission exceeding $ 250 billion. In addition, the most recent ones concerned Ecuador and Pakistan (respectively in March and July 2019), where reforms of the tax system, the exchange rate regime, Central Bank regulation, labor law and even financial inclusion and education programs have been put in place. the women. As noted above, the plan encourages changes in almost the entire economic and social system and covers more areas than the to be listening.

First, it should be noted that the EFF is not as tax-intensive as the to be listening, or that, since the countries having access to this loan were already under a to be listeningyour public account balancing needs are not so pressing. So the the performance GDP growth under EFF is positive.

One of the main areas for reform by VETs is usually labor law.: Eliminate your friction so that employment increases as well. In other words, promote supply policies to simplify hiring and thus promote job creation. However, at this stage, their results are meager. For example, in the average of the countries under FEP, unemployment has increased by about 3%. over the years, the agreement was signed and the above-mentioned reforms took place. In the same vein, it took four to five years for the labor market to recover (return to the initial situation), despite the context of economic growth.