Economy Minister begins crusade across Europe to postpone debt payment to IMF and Paris Club

The Minister of the Economy, Martín Guzmán, will today insist at the assembly of the International Monetary Fund (IMF) on the need to reduce the cost of the agency’s credits, before leaving this weekend to move forward in negotiation of a payment deferral agreement to this body and to the Paris Club.

It’s about $ 7,000 million in principal maturities for this year. Meanwhile, Guzmán has managed, along with other peers from emerging countries, to start discussing two important issues, but they will not be easy to achieve.

The first point is the idea that, from the new issuance of Special Drawing Rights (SDRs) for $ 650 billion, it should be relocated from the richest countries to the middle-income ones, as requested yesterday by the Argentina and Mexico. The intention is that if there are unused resources in the treasuries of the G7 countries, they can be loaned through a “common fund” to those who need them most.

Faced with this proposal, with all her diplomacy, yesterday the general manager Kristalina Georgieva He replied that the issue will be debated “painfully in the coming months” – as well as the expansion of the SDR itself, which will not happen until September – but He specified that the global discussion on the “relocation” of these resources must necessarily be followed by a discussion in each of the countries likely to contribute to this fund. Nothing to look forward to in the short term.

It should be recalled that Georgieva said that the expansion of SDRs will be discussed in June at the board of directors and then there will be a delay of about four months.

The second important issue that Guzmán has managed to “squeeze” among his peers is the possibility of reducing the interest surcharges that the Fund charges for its loans. In the case of Argentina, This is a discussion of $ 1,455 million, between $ 952.87 million in the event of surcharges and $ 502 million in annual interest, according to official sources.

However, here too, Georgieva put the brakes on the minister’s enthusiasm, specifying that these surcharges were applied so that the Fund safeguard the health of its portfolio and, in addition, so that there is no excessive inducement to seek money in the body. instead of trying to bring it to market.

Neither issue seems insurmountable, but it is very complex, given that a significant majority of the 190 IMF members, including Argentina, are expected to agree on both. Therefore, the conclusion is that the government will not have the resources to meet all debt principal payments this year without a deferral agreement to defer the payment of the $ 45 billion debt with the Fund. that the country has contracted in the administration of Mauricio Macri.

Four countries in five days

Some of these issues will also be discussed by Guzmán from Monday in Europe, as well as the postponement of the Paris Club payment to next month of $ 2.4 billion.

During the tour, they reported to the Palacio de Hacienda, “he plans to hold meetings with the economy and finance ministers, officials and the private sector.” The minister will spend five days on the old continent, where he will travel to Germany, Italy, Spain and France and meet his peers from these countries. He will be leaving tomorrow, but he plans to start his meetings on Monday 12 in Berlin with Olaf Scholz, will continue through Rome with Daniele Franco, in Madrid with Maria jesus montero and will end with Bruno the Mayor the 16th in Paris, where the Paris Club is based.

With them, he will discuss “the renegotiation with the IMF to reach a new agreement and the debt with the Paris Club”. The objective will be “to make people understand what Argentina needs to stabilize its economy”; Guzmán made it clear that for this stabilization he needed a new agreement.

“The objective is to obtain the necessary support from IMF shareholders, in particular the G7 and G20, to finalize a program that will serve Argentina,” they said.

The cost of deferral of payment with the Paris Club is lower than that of an agreement with the IMF in financial terms, because in the past Argentina was in default with its official creditors and did not have major consequences, as it also did not have significant bilateral credits.

The cost of signing with the IMF seems more political than financial, since, with the picture of the world situation that Georgieva described yesterday, It is quite possible that the agency will not ask the government for an additional adjustment for this year, beyond what it has already done by capping the increase in retirees and reducing aid to businesses and individuals. , at least for now, plus the increase in tax revenue.

In this sense, if Guzmán were to succeed in his European crusade – which will not be easy, due to the “macroeconomic imbalances” that the Fund has again highlighted this week – he might have more support to convince his political leaders than that. is better. to have resources and go to elections with the dollar calm than the other way around. Among other reasons, because perhaps these referents will have the capacity to convince their electoral base that the new agreement with the IMF, this time, will be good for the country.

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