IMF chief, Argentina flag path to new debt deal after G20 meet in Riyadh
Argentina on Saturday agreed to start consultations with the International Monetary Fund that could lead to a new financing program, days after the global lender said the country’s debt situation had become “unsustainable”, Trend reports citing Reuters.
Argentine Economy Minister Martin Guzman told IMF Managing Director Kristalina Georgieva that the heavily indebted Latin American country would initiate formal consultations with the IMF that could lay the groundwork for a new program, the Argentine government and the IMF said in separate statements.
Guzman and Georgieva met on the sidelines of a meeting of finance officials from the world’s 20 largest economies in Riyadh, Saudi Arabia.
“The minister informed the managing director of the government’s intention to initiate Article IV consultations, which the minister called a valuable step that will deepen mutual understanding between the Argentine government and the IMF on the way toward a new program with the agency,” the government it said.
Article IV talks would allow the IMF to inspect Argentina’s accounts before a new agreement is signed. This would give an assurance to bondholders as they head into restructuring talks that Argentina, notorious for mismanaging its debt, is under IMF supervision. The South American country has defaulted on debt obligations eight times so far and Guzman has said he wanted the upcoming bond revamp to be done in a spirit of cooperation.
Finance officials at the G20 meeting expressed relief that Argentina’s new government had agreed to remain engaged with the IMF, saying it lowered the risk of a messy default at a time when the global economy is facing heightened risks due to the fast-spreading coronavirus.
But Mark Sobel, a former senior U.S. Treasury official and adviser to the London-based OMFIF think-tank, said the decision to consult with the IMF, but not move directly into a new program, reflected the new Peronist government’s historic aversion to the Fund.
“They’re not walking away, but they’re also not going to be in a Fund program for a bit, and who knows when,” he said.