The demand for support from those who are developed to the most v …

IMF Managing Director Kristalina Georgieva said the IMF will discuss with member states about the proposal by Argentina and Mexico so that middle-income countries can greater access to special drawing rights (DTS) to be issued this year. On the other hand, the head of the Fund avoided specifying whether the debt renegotiation agreement with Argentina would take place before or after the legislative elections in October, while admitting that “agreements have been reached on general principles from the program”.

One of these commonalities is the idea that inflation is not just a monetary phenomenon, but that it responds to several causes, including the exchange rate, which in turn has a very unique dynamic. in a two-monetary economy like Argentina. He also endorsed Minister Martín Guzmán in his request for lower interest rates on IMF programs for the countries most in difficulty, although this also justifies the agency in relation to this system of credit costs.

The International Monetary Fund (IMF) rolled out its virtual meeting agenda as part of its spring meeting (northern hemisphere). The central document of these meetings is the World Economic Outlook. Compared to the update of its forecasts last January, the agency now expects that a global economy growth this year, 0.5 additional point, up to a 6 percent. To a large extent, this better forecast is tied to the more optimistic forecast for the US economy, which has gone from an expected growth of 5.1% to 6.4% by 2021. Nonetheless, the IMF assesses the situation of the world economy as a race between viruses and vaccines. The agency estimates that in emerging economies, with the exception of China, the loss of GDP per capita between 2020 and 2022 reaches 20% compared to 2019.

“We will discuss it”

Regarding the joint request of Argentina and Mexico that developed economies support the most vulnerable with her share of the next issue of dts, the executive director said that “We will discuss it with members to see if there is enough support “. “There are middle-income countries that have entered this difficult crisis, with limited fiscal space, high debt situations or dependence on heavily affected activities such as tourism. This is why they have fewer resources to support the recovery of the economy. When we look at these situations, we ask ourselves how we can provide more support, ”said Georgieva. “Due to current debt levels, we don’t see a systemic debt crisis. But we want the situation to stay that way. This is why we will continue to analyze the issue, ”he added.

The Fund is expected to issue 650 billion dollars in SDRs. The allocation of these resources is directly linked to the quota of the member country in the Fund. In other words, the more powerful economies which are generally in a better economic position receive more than the smaller and normally more indebted countries. In any case, Argentina would receive a very large amount for the time being in the current context of macroeconomic weakness, of around 4.4 billion dollars.

On the other hand, Georgieva referred to Minister Guzmán’s request on the rate reduction interest on IMF loans for the most financially compromised countries, such as Argentina. In the national case, the surcharge is 200 basis points for exceeding the amount granted in relation to the country’s quota and reaches 300 points if the repayment term exceeds four years.

“We have to recognize two things. First, Guzmán raises this question at a time when the Fund will be in a period of rate revision. And this one This is the time when this sort of thing can be discussed. Second, there is a reason the Fund introduced these exceptional lending rates, and it is to get countries in and out of programs as efficiently as possible. Given that the Fund is an institution that lends to countries generally facing difficulties, this represents a high risk and it requires strengthening the soundness from the prudence of the balance sheets, not according to the direction of the Fund but to Member States. This is linked to the prudential management of resources. And as I said, there will be a review and as always, the member countries will be heard ”.

Regarding the renegotiation of the debt with Argentina, the director general avoided specifying whether an agreement could be reached before the legislative elections in October, while stressing the “understanding” between technical staff and the government.