Wednesday, February 26, 2020

Argentina begins difficult debt renegotiation with IMF

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"Debt is unsustainable". Categorical, the Minister of the Economy, Martín Guzmán, explained to the Argentine Congress, Wednesday, February 12, the reasons why the government of Alberto Fernández (center-left, in power since December 10, 2019) will seek to reschedule the reimbursement of a large part of the country's public debt. With a total value of 311 billion dollars (286 billion euros), it currently exceeds 90% of Argentina's GDP.

The country must in particular repay the International Monetary Fund (IMF) the $ 44 billion that the financial institution has granted it to help it cope with the serious economic and social crisis that Argentina has been going through since mid-2018. The loan requested by former Liberal President Mauricio Macri (2015-2019) was to total $ 57 billion, but the new head of state Alberto Fernández did not wish to receive the rest of these payments – "What I want is to stop asking for money and start paying", he said, in late November 2019.

"In reality, the agreement between Argentina and the IMF is obsolete"

Fall in production and consumption, sharp rise in unemployment, inflation and poverty (which currently affects almost 40% of Argentines) … Wednesday February 12, Mr. Guzmán unveiled a series of alarming indicators before members of Congress. Very critical of the Macri government's mismanagement – "The largest loan in the history of the IMF was absolutely not used to increase the country's production capacity but to repay debts and finance the capital flight" – the Minister of the Economy castigated the austerity plan demanded by the international organization in return for his loan, judging the IMF "Responsible for the debt crisis and the economic crisis in Argentina today. "

The minister’s presentation coincided with the arrival of an IMF technical mission to Buenos Aires, the first since the start of Alberto Fernández’s tenure. Thousands of protesters gathered in front of Congress on Wednesday at the call of organizations and unions, with a rallying cry: "Fuera el FMI! (The IMF out!).

If this visit – of five days – should in theory make it possible to assess the economic situation of the country, "In reality, the agreement between Argentina and the IMF has lapsed, points out Pablo Bortz, economist professor at the National University of San Martín, and this mission will rather serve to define the broad lines of the renegotiation of the debt. "

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