IMF could give Argentina more time to pay off loan – 03/04/2019

In the last hours, bank and investment funds They had talks in Buenos Aires with economists from IMF staff and the opposition. Increasingly close to elections and exchange rate fluctuations, the holders of the Argentine debt question the prospects of operation of the program with the agency in the country. short term, such as the calibration of to be listening if the volatility of the dollar increases, and the problems of middle term, the obligation for the next government to cancel the US $ 56,500 million debt owed to the Fund.

At least, that's what happened at a meeting organized by the bank Santander and your customers with Trevor Alleyne, representative of the IMF in Buenos Aires, and Romain Veyrune, specialist in the monetary and financial market of the organization. Also in another of Morgan Stanley with two economists from the team Axel Kicillof.

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At the first meeting, as he was known through a memo circulated in the last few hours with the details of the meeting, the Fund representative revealed that the organization is expecting a l & # 39; inflation 30/31% per annum in 2019, provided for a recovery in GDP from this quarter, as inflation would offset the drop in the collection, as the adjustment of external accounts and the refinancing of the public debt to Short-term trading was proceeding better than expected and it is forecasting higher refinancing risks from the second half of the year.

The presentation and badistance in the memo were both confirmed. Clarin by the participants who asked in exchange for not being appointed. In addition to Alleyne and Veyrune, the list mentions Alejandro Haro and Juan Arranz, from Santander. Among the funds, Christian Cavanagh (Delta), Mariano Fiorito (Schroder), Ezequiel Cohn (Consultatio) and Andrés Nobile (Toronto Trust). The IMF, consulted on this matter, did not comment on the meeting of the Board of Directors tomorrow, during which it will approve a key disbursement for the country. "They were concerned about the dogmatism possibly from the IMF's approach ", summed up in the note the impression that investors had hired IMF staff.

At the meeting, there was a round trip between the IMF economist and the investors. Alleyne ruled out the possibility of applying capital control and prohibit foreigners from participating in the auctions that the Treasury will launch in 10 days.

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He responded by criticizing the design of the dollar's non-intervention zone – its price may vary by 29% and the Central Bank is not allowed to intervene – and explained that the fluctuations are due to the risk that Cristina Kirchner is president and unresolved with interventions from the BCRA. He said economic indicators in Ecuador are performing poorly and that, however, country risk is 200 points lower. Alleyne responded by asking why the banks did not offer higher rates to their clients while the BCRA was paying 67.98% with the Leliq.

At one point, the situation was left out and the country was badyzed to cancel the debt with the IMF. A calculation of the consultant Analytica stresses that the next government will have to come back 40 billion USD between 2022 and 2023. The IMF representative replied that confirmation agreements such as the one currently in force with Argentina – expiring in June 2021 – tend to be transformed into something known Extended installation program (EFF according to its acronym in English). "This involves little extra money compared to that granted by the stand-by, but they give a much longer time in the restructuring of payments with the IMF debt"explained the representative according to the memo. L & # 39; economist Julio Piekarz, former director of the BCRA, tweeted that "the financial plan of the next government will probably include the conversion of the reserve into an extended fund.The EFF helps countries that require structural reforms in the medium term and has repayment terms of 4 at 10 years, longer than the waiting period of 3.5 to 5 years ". Alleyne alluded to the pension and work reform, among others. And he quoted Ukraine example.

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In its latest rating report, the Fund stated that debt Argentine public "It's sustainable, but not with a high probability". He said the country was facing macroeconomic risks: a 50% devaluation and a recession could bring the public debt to around 120% of GDP.

The weakness of the Argentine debt, says the IMF, lies in its high proportion denominated in dollars, hence the need for a primary surplus of 1% of GDP for next year. Econviews estimates that it takes between 1.5% of GDP and 2%.

Another meeting held a few days ago in Buenos Aires took place between representatives of Morgan Stanley and their clients, who met with two economists from Axel Kicillof's team. The meeting was held in one of the MP's offices, in front of the Congress. They ruled out that among the plans of the former Minister of Economy, figure to not pay the debt with private creditors. But they admit that repayment of debt from the IMF would be renegotiated.