Guzmán request to the Paris Club: “We must avoid a negative shock on the Argentine economy”

PARIS – Joseph Stiglitz was right. Martín Guzmán is extremely intelligent. He has an intellectual mechanism that works at the speed of light. So much so that by questioning him almost at the end of his European tour, the objective of which was to obtain international support to reschedule the maturities of Argentina’s external debt, we cannot help but hope that this gift from heaven will be used to recover the country. out of the predicament into the one that is.

In dialogue with THE NATION, after meeting yesterday with the President of the Paris Club and his French counterpart, Bruno Le Maire, the Minister of the Economy does not lose hope of reaching an agreement with the International Monetary Fund in May, but recognizes that it will be difficult ” for the multiple consensuses that must be reached ”. Therefore, given the possibility of a delay in this agreement, he asks the Paris Club for a deadline to “define actions that avoid a negative blow to the Argentine economy”.

Affable, courteous, in a good mood, Guzmán received THE NATION at the residence of the Argentine Ambassador to France, Leonardo Costantino, on the exclusive Avenue Foch in Paris. In jeans, sneakers, sweater and blazer, Guzmán gives the feeling of being just one of those brilliant students trained at Brown University, the prestigious house of graduate studies where he studied in the United States. His mantra: “a good deal is better than a quick chord”; its slogan, “obtain consensus”.

In a speech limited by the agenda imposed by the European tour, the minister referred to a trip that does not seem to have produced the expected results so far.

– Have all European countries expressed their support for Argentina to reach an agreement with the IMF?

– There is a very constructive attitude on the part of the different countries that we visit. We believe that this direct dialogue is essential in a process that requires reaching multiple levels of consensus. One of them is an international consensus which results in IMF support for the program proposed by Argentina. And in this direction, significant progress has been made. We had the opportunity to discuss macroeconomic policy and production policies in detail. And they worked with them and got a redefinition of commitments with the Paris Club, so as not to have to face a shock that is hurting the economy as it recovers. Also yesterday, in Paris, there was very constructive work which will continue in the weeks to come with the aim of achieving, as quickly as possible, a positive result.

– I am looking at the Argentina bond calendar and on May 31 there is a maturity of $ 2.4 billion. Argentina would receive around $ 4.4 billion in August which might allow it to meet certain obligations. And a possible agreement with the IMF on debt is expected in June or – more likely – after the elections. Does this mean that the country will not be able to pay these fees to the Paris Club on time and will default?

– There are two questions here in parallel: the question of negotiations with the IMF and the question of the Paris Club. We must first remember what put us in the situation we find ourselves in and why we must move forward in these negotiations. What happened between 2018 and 2019 is that the previous government took out a loan of $ 57 billion, of which $ 45 billion was disbursed. This money was used to finance the payment of unsustainable foreign currency debts, which we then restructured into obtaining substantial debt relief, and to finance capital outflows. In the previous two years that there was a loan take, which caused this unsustainable situation, none of those credits were used to ultimately resolve the problem with the Paris Club. Consequently, Argentina is today in a situation where we must conduct negotiations which allow us to postpone these deadlines or to refinance them and thus be able to give way to the continuity of the economic recovery. It is common that, for a rescheduling, the Paris Club requests that there be a program with the IMF. But here, in fact, there is a question of timing.

– Precisely …

– To carry out the program with the IMF, it is necessary to build several levels of consensus. It is done. But it can take a long time. It can go more or less quickly. But the most important thing is not that it happens quickly, but that it is done well. Let it be a program based on reasonable premises for the functioning of the Argentine economy with international support.

– And what did the Paris Club specifically respond to this argument?

– We raised this issue at the Paris Club and, since we know that at some point this debt with the IMF needs to be refinanced, there is no doubt about Argentina’s constructive involvement based on the good faith. It is therefore considered that if an agreement were reached with the IMF in May, that would allow a positive result, but it is extremely complex because of the multiple consensuses that must be reached. This would imply that the debt with the Paris Club could be renegotiated at that time.

– In May? But weren’t the terms of this agreement with the IMF scheduled for June?

-… If it takes more time to reach an agreement and it happens later, the important thing is to have more time with the Paris Club to be able to resolve this problem. It is therefore negotiated here understanding that the tree has different branches and that it is necessary to prepare not only in the event of an agreement soon, but also to take into account the possibility that it will take more time to reach it and define actions that avoid a hard blow. negative of the Argentine economy in each of these branches. And that’s what we’re trying to do.

– And the French Minister of the Economy, Bruno Le Maire, was he sensitive to this kind of approach? What is the next step?

– With the Paris Club, the process continues its course. The parties have already listened. We had a direct dialogue with the member countries of the Paris Club and directly with the secretariat of the body. They will have their own meetings.

– Are there any technical meetings planned with the Emmanuel Moulin, Paris Club and Argentina team for the next few weeks?

– There was a technical meeting yesterday and now it is the Paris Club which must analyze what Argentina is asking for and define certain conditions for the continuity of the negotiations, so that we can continue to work in a way that seeks accordingly to avoid a negative shock for the Argentine economy.

– Are there dates? Does the Paris Club have to respond at a specific time?

– A good answer is better than a quick answer. But the Paris Club works. Dialogue will continue, but progress has been made in reaching the necessary agreements to ensure a positive outcome for all parties.

– In short, could we say that it was a good tour from a diplomatic point of view rather than a technical one?

– In all respects, it was a tour that we consider very constructive and that our counterparts have also expressed.

– What would you like? Whether the agreement with the IMF is finalized in May, June or after the elections? I am asking him the question personally, as Minister of the Economy, and not on behalf of the whole government.

– What I want is that the agreement works well and is based on the consensus necessary for it to have social legitimacy and robustness. What comes next are the times. And, of course, the sooner the necessary consensus is achieved at the international level, the better.

– Why does the Minister of the Economy want to visit Russia?

– We had considered traveling to Russia before starting this tour, but some confirmations were missing from some key officials. We have traveled to deal with a range of economic issues that are very important to Argentina as part of a cooperative work that has been carried out with Russia. One of them is the discussion taking place at the global level on how to allocate the increases in liquidity generated around the world, through positive global policies. There were initial proposals that these increases in liquidity should flow from countries that do not need it to low-income countries. We consider this important, but middle-income countries should also be able to access some of this liquidity, as they face asymmetric conditions compared to advanced countries. They also face serious social problems. 65% of the world’s population, which today finds itself in poverty, resides in middle-class countries. Russia, which is a major global player on this issue, is essential in moving this project forward. If global rules could be built for the situation of middle-income countries, Argentina would benefit directly because our external position would be strengthened. We will also talk about our negotiations with the IMF. Finally, the issue of vaccines, which is an agenda that the presidency has carried out in collaboration with the Ministry of Health. We are still providing support from a technical point of view, and for the time being, as it is possible to be able to build a production plant for the Sputnik V vaccine in Argentina, the Ministry of Economy will continue to be present.