The IMF postponed without date the distribution of more resources to countries like Argentina, which hoped to obtain some USD 3,500 million


The arrival of additional resources from the International Monetary Fund (IMF) to Argentina as a result of the expansion of its “currency” (special drawing rights, SDR) will take considerably longer than expected by the Government.

This month the directory of the multilateral organization that Kristalina Georgieva would have approved the expansion of the SDRs for their partner countries, which would have allowed Argentina has an additional 3,500 million dollars to reinforce its reserves, for current expenses or debt payments.

They are key resources in a context in which the country does not have access to the voluntary debt market and only has external credit from multilateral banks for specific programs.

“We need to use the full economic policy toolkit to provide global liquidity. For example: there should be extensions of theswaps bilateral (bilateral currency exchanges) with the most advanced economies, as well as increases in the Special Drawing Rights of the International Monetary Fund. This is a global emergency that requires courageous and forceful global policies, “said Guzmán weeks ago.

In fact, Argentina benefited from a similar measure in 2009, when it received some 2.5 billion dollars during the government of Cristina Kirchner.

However, qualified sources of the organism clarified in the last hours that the debate on this issue is far from settled.

In fact, the opposition of the United States government, the main contributor to the Fund, to this change is public, since He believes that the G20 countries do not need it and neither does he want to support its extension to other countries due to geopolitical issues, such as China and Iran.

In this regard, the US Treasury Secretary, Steven Mnuchin, affirmed last week at the Fund’s boreal spring assembly that expanding SDRs “is not an effective tool to respond to urgent needs.” The US official said that about 70% of the new issue would go to the G20 countries.

But not only the US is opposed, but also Germany, another important partner of the Fund, and India, among other countries.

In this sense, the source of the Fund said yesterday that “our members have had a fairly important debate on the merits of a new SDR allocation.”

This means, he clarified, that the greater distribution of the DEGS is not something that will be solved in the short term, although the discussion around this question that had been proposed by Georgieva herself will continue, until now, without success.

The source admitted that “the liquidity challenge for the countries has not diminished. So we must continue to explore and exhaust all the options we can consider. “

The United States, which recently designated IMF number two as Geoffrey Okamoto, believes that existing SDRs can be exchanged bilaterally and voluntarily, through swaps.

For this reason, consider that it is more logical that developed countries that have these SDRs and do not use them (since it is a reinforcement of the reserves of their central banks, in themselves solid), exchange them with the members of the Fund more complicated due to questions of liquidity. The option would be for those who, at the same time, cannot apply to the new line of the organization for countries with sound macroeconomic policies, such as Argentina.

This is not the only disagreement regarding decisions that include Argentina, since, according to Infobae, the technical note of the Fund’s staff in which a very strong withdrawal was endorsed for private creditors, caused the protest of some G7 representatives on the board.

Argentina believes that it has the IMF in its pocket, but this is not the case. There is anger from some important members of the board for the technical note from the staff on the debt, ”explained a source familiar with these discussions.

“The United States is not going to support a country that does not show its economic plan or follow the policies it needs to improve its macroeconomic situation,” he added.

President Alberto Fernández and Guzmán have said that the IMF explicitly supported their approach to negotiating with private creditors, but Georgieva’s conciliatory words do not always reflect the thinking of the body’s majority shareholders.

In this regard, the IMF source indicated that it has not yet been decided which will be the way of supporting the country, nor if the government’s request to postpone the debt payment with the agency for three years will be accepted. The maturity of the USD 44 billion debt falls between 2021 and 2023.

Regarding Argentina, we had the pleasure of discussing this and other issues with Argentine officials. President Fernández and his government have been very proactive and decisive in trying to contain the health crisis in Argentina. They have also had, although in the midst of this, continue to deal with an extraordinary economic shock and that exposes vulnerable segments of the population and certain sectors of small companies that have had to face quite extraordinary pain, “he explained.

Immediately, he clarified that “the ongoing discussions that Argentina is having with private creditors are being watched closely.”

We hope that at some point there will be an agreement that can be reached there that will restore debt sustainability.. The important thing here is to keep an eye on debt as a goal; I know that it is an objective of the Argentine authorities to restore the sustainability of the debt, and thus provide a solid basis for Argentina to build economic stability, “he stressed.

This objective, he remarked, “is going to be necessary within the crisis and beyond the crisis.”

“In terms of what we can do for countries facing challenges like this, and this is not limited to Argentina, where debt creates a particular challenge, I think we are trying to explore what we can do to help these countries,” Indian.

However, he clarified that “the Fund has policies put in place by members to safeguard its resources, which must be respected in all the financial operations that we carry out.”

The source only reiterated that the talks with the government “have been very productive, they started a while ago, they are not recent. And that commitment continues. “

“We are ready to do everything possible to help Argentina regain its economy on a solid foundation and we hope that the ongoing negotiations will be fruitful. But I have to refuse to specify exactly where things are about Argentina ”, he concluded, enigmatic.


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