What is Martín Guzmán looking for in the negotiations with the IMF | Gradualism or shock

The main point of contention in the Frente de Todos regarding the deal with the International Monetary Fund is whether it should establish a deadline for repaying the debt that the Cambiemos government has taken of 10 or 20 years.. Mauricio Macri managed $ 45 billion between June 2018, when Argentina received the first disbursement of the agency’s largest loan in its history, until July 2019, the date of the last shipment. Such a sum of money in just 13 months has failed to stop the economic crisis engendered in this administration, which ended in general chaos.

Had Argentina received $ 45 billion between June 2020 and this month, the possibilities for responding to the pandemic and the economic catastrophe it has brought with it would have been radically different. The IFE, the ATP, the Empower Work plan, the construction of hospitals and infrastructures, Repro 2, the Alimentar Card and all the other support systems for businesses and families would have benefited from substantial support for extend amounts and coverage.

Central Bank reserves currently stand at $ 42,727 million. Cambiemos’ government lost 45,000 million that the IMF lent it. And the total theft during his four years in government has reached $ 86,000 million. That is to say that two reserves were slipped.

The reference is known, but necessary to frame the debate. Otherwise it is necessary to cut the consultants and the media which accompanied the stage of the wild indebtedness vis-à-vis the internal disputes of the party in power, hiding their responsibility for the disaster which they left and must be repaired.

Instead of receiving funds in the emergency, Argentina in pandemic had to pay. Alberto Fernández recalled this Friday that by the end of the year we must return 5,000 million dollars to the IMF. So far in 2021, 900 million have already been paid.

The agency, in turn, will look to the country 4.3 billion at the end of August or the beginning of September for the capitalization decided by the main powers, as a relief to the associated countries due to the health crisis. It is not a loan, because it is not a foreign currency to be repaid. This is an exceptional aid, since it was put in place in 2008 after the international financial crisis with its epicenter in the United States.

Government advances in negotiations with IMF for 10-year deal. Martín Guzmán explained that this is the maximum offered by the organization in its current legal structure. There are no longer any term programs.

The Minister specifies that the Argentina will only sign a new deal if it includes a clause ensuring the country will have access to better lines of finance if the agency implements them later.. He understands that the world is turning in that direction, the same direction the national government is pushing, and that the solutions will be conquered and perfected over time.

One example is the global tax on multinationals, he mentions, which the country demanded at the summit of G-20 economics ministers last year and which is becoming a reality under the impetus from the new US government and support from the G-7. .

The Government’s strategy is to come to an agreement with the Fund under the best possible conditions in the current situation and subsequently obtain new credits or more suitable support mechanisms.

“We need a modernization of the credit lines of the multilateral development banks. Markets will not provide the kind of financing economies need to tackle issues of inequality, climate change and digitization. Multilateralism is a way to find solutions. We are positive and we hope to work together to achieve this effectively, ”the minister conveyed on Friday during his participation in the meeting of G-20 economy ministers in Venice.

In any case, to sign a new program with the IMF, the government demands that it remove the surcharge for having exceeded the limit of what could be borrowed. As the Macri government has far exceeded the amount of credit the country could aspire to for its quota in the body, it now faces a surcharge of $ 900 million to $ 1,000 million per year in interest..

Guzmán has already informed the Fund that there is no possibility of reaching a deal if it is not canceled. The difference is about $ 10 billion in ten years. “It is a cost that we cannot accept. If there was a political arrangement to give extraordinary resources to the Cambiemos government, now the IMF must also agree to a political solution, ”they say at the Palacio de Hacienda.

Máximo Kirchner of Congress raised the whole issue in another way: “Do you think the loan can be repaid in 10 years? “” If we do not agree to negotiate this debt, the investment that the private sector needs will be impossible. You cannot serve two lords “, he warned this week during an exhibition in the Chamber of Deputies. “We have this in front of us – the debt – and we have to resolve it. I do not want to imagine how we are going to make compatible the growth and development that Argentina needs to respond to people with what the Fund wants, ”he added.

The debate within the ruling party, in short, is between negotiating a 10-year agreement and continuing to work on the international scene to obtain other support and funding, or directly refusing an agreement if not in 20 years. .

In the ranks of Together for Change, there are no voices that recognize the mistakes made or proposals on how to move forward.. Internal feuds continue to be between those who wanted to make a shock adjustment and those who suggested that the adjustment should be gradual in the years of the Macri government. The economists and leaders on the lists for the next election are essentially the same as then, and their ideas have not changed.