The government resumes dialogue with the IMF: key points of the negotiations

After the break that the end of year holidays meant The government will resume negotiations with the International Monetary Fund (IMF) this week, with the objective of closing a new financing program to replace the one signed in 2018 before April.

The latest meetings were face-to-face in Washington DC, when finance ministry officials demonstrated their strategies for encouraging peso lending in the local financial market, while the Fund’s technical staff collected from large investors impressions of the Argentine economic situation.

From this week, the formal dialogue will resume through virtual meetings with the organization, which should intensify in February with the arrival of a new technical mission, unless the economic situation becomes more complicated and forces to accelerate.

The intention of the government is to achieve the launch of the Fund before May, which is why March or April appear as the deadlines mentioned by economic officials, due to the fact thatIn this month, a major $ 2.4 billion Paris Club debt due comes due, the main dollar payment obligation of 2021.

Minister Guzmán’s idea is to be able to renegotiate with the multilateral creditor, which, as a condition of a new agreement, requires having signed a financing program with the IMF.

Although the agreement Argentina signed in 2014 with the Paris Club did not include this condition as it was a contract for that Instead of being traditional, to initiate conversations to restructure creditors, they will need a new funding program, as it is usually tied to key macroeconomic performance targets that ensure some sustainability to meet their obligations. .

Instead of a program Be ready, the government is pursuing an extended facilities agreement (EFF), which would mean a financing plan lasting 7 to 10 years, confirmed the IMF representative in the Southern Cone, Sergio Chodos, last weekend.

According to the estimates of the consulting firm Ecolatina before the negotiation, an EFF would mean a much more comfortable plan than the stand-by since the largest principal payments will be made between 2025 and 2031 without in any year exceeding the 10,000 million dollars.

One of the problems highlighted by the government when it refers to the negotiations is that it will submit the possible program to vote in Congress, which he hopes to present at the opening of ordinary sessions on March 1.

This document will not only enter the legislative domain, since the multi-year macroeconomic program, in which is reflected the expected trajectory for the years to come in terms of budget, inflation and international reserves.

Although the government has not yet put forward the details, these targets will send a signal to the IMF, which has called for a “road map” (ie a coherent fiscal and monetary program).