Zürcher Nachrichten - IMF risks losing legitimacy over Argentina loan: minister

EUR -
AED 3.818175
AFN 72.797719
ALL 98.449296
AMD 411.004828
ANG 1.872955
AOA 948.054394
ARS 1066.311715
AUD 1.668113
AWG 1.87116
AZN 1.768965
BAM 1.954396
BBD 2.098393
BDT 124.19081
BGN 1.955581
BHD 0.392145
BIF 3072.59335
BMD 1.039533
BND 1.410387
BOB 7.196831
BRL 6.437413
BSD 1.039254
BTN 88.509435
BWP 14.374677
BYN 3.400558
BYR 20374.855355
BZD 2.090099
CAD 1.497624
CDF 2983.460647
CHF 0.935829
CLF 0.037222
CLP 1027.163148
CNY 7.585372
CNH 7.588908
COP 4586.421522
CRC 527.721006
CUC 1.039533
CUP 27.547636
CVE 110.185868
CZK 25.132789
DJF 185.06709
DKK 7.460721
DOP 63.054716
DZD 140.566631
EGP 52.908195
ERN 15.593002
ETB 132.294989
FJD 2.411977
FKP 0.823292
GBP 0.829486
GEL 2.920682
GGP 0.823292
GHS 15.277028
GIP 0.823292
GMD 74.846661
GNF 8978.551858
GTQ 8.007249
GYD 217.423852
HKD 8.074363
HNL 26.398042
HRK 7.456476
HTG 135.892406
HUF 411.386519
IDR 16854.007582
ILS 3.816247
IMP 0.823292
INR 88.537577
IQD 1361.422265
IRR 43751.368531
ISK 145.098247
JEP 0.823292
JMD 162.233488
JOD 0.737345
JPY 163.308108
KES 134.359917
KGS 90.43918
KHR 4168.006655
KMF 484.552483
KPW 935.579512
KRW 1516.736442
KWD 0.320353
KYD 0.866078
KZT 542.14065
LAK 22741.667577
LBP 93065.16323
LKR 307.719005
LRD 189.144162
LSL 19.151746
LTL 3.069472
LVL 0.628803
LYD 5.103335
MAD 10.455991
MDL 19.13226
MGA 4899.481331
MKD 61.484688
MMK 3376.364052
MNT 3532.334482
MOP 8.317127
MRU 41.38328
MUR 48.930718
MVR 16.006255
MWK 1802.105779
MXN 20.946609
MYR 4.664402
MZN 66.430063
NAD 19.151746
NGN 1609.062836
NIO 38.242535
NOK 11.851383
NPR 141.615296
NZD 1.844195
OMR 0.400229
PAB 1.039254
PEN 3.876416
PGK 4.215972
PHP 60.790857
PKR 289.562045
PLN 4.272583
PYG 8113.173348
QAR 3.788779
RON 4.974478
RSD 116.96726
RUB 103.956844
RWF 1439.366288
SAR 3.902853
SBD 8.714986
SCR 14.844265
SDG 625.277692
SEK 11.524705
SGD 1.413157
SHP 0.823292
SLE 23.699822
SLL 21798.499544
SOS 593.973425
SRD 36.51156
STD 21516.243325
SVC 9.093469
SYP 2611.859198
SZL 19.14625
THB 35.502128
TJS 11.353846
TMT 3.648762
TND 3.309823
TOP 2.434695
TRY 36.647089
TTD 7.05893
TWD 33.975901
TZS 2515.671135
UAH 43.68063
UGX 3819.257117
USD 1.039533
UYU 46.496607
UZS 13408.370487
VES 53.614006
VND 26445.730624
VUV 123.415492
WST 2.87201
XAF 655.486248
XAG 0.035243
XAU 0.000398
XCD 2.809391
XDR 0.796728
XOF 655.486248
XPF 119.331742
YER 260.273179
ZAR 19.359023
ZMK 9357.102525
ZMW 28.761344
ZWL 334.729342
  • RBGPF

    -0.7000

    59.8

    -1.17%

  • CMSC

    -0.1522

    23.7499

    -0.64%

  • RELX

    0.1400

    45.73

    +0.31%

  • BCE

    0.1250

    22.965

    +0.54%

  • RIO

    -0.0600

    59.17

    -0.1%

  • SCS

    -0.0500

    11.6

    -0.43%

  • AZN

    -0.2150

    66.415

    -0.32%

  • GSK

    0.0250

    34.085

    +0.07%

  • NGG

    -0.2550

    58.765

    -0.43%

  • BTI

    -0.0180

    36.202

    -0.05%

  • RYCEF

    -0.0200

    7.25

    -0.28%

  • JRI

    0.0800

    12.18

    +0.66%

  • BCC

    0.5480

    122.788

    +0.45%

  • CMSD

    -0.2500

    23.3

    -1.07%

  • VOD

    0.0950

    8.465

    +1.12%

  • BP

    0.1200

    28.87

    +0.42%

IMF risks losing legitimacy over Argentina loan: minister
IMF risks losing legitimacy over Argentina loan: minister

IMF risks losing legitimacy over Argentina loan: minister

Argentina's economy minister, renegotiating a massive loan with the International Monetary Fund, warned the lender risked losing credibility if it "pushes" the country "into a destabilizing situation."

Text size:

Argentina has received $44 billion of a $57 billion loan the lender itself said last month had failed to achieve its objectives of restoring confidence in the country's fiscal viability and fostering economic growth.

Latin America's third-largest economy has been in recession since 2018 and is seeking to renegotiate its down payment plan, with amounts of $19 billion and $20 billion due in 2022 and 2023.

The country registered GDP growth of 10 percent in 2021 after a drop of 9.9 percent the previous year largely due to the coronavirus pandemic.

Guzman, in an interview with AFP, said the repayment calendar was "unsustainable" for a country battling a poverty rate of some 40 percent and one of the highest inflation rates in the world at 50 percent.

The government of center-left President Alberto Fernandez, who refused to accept the last $13 billion of the IMF's biggest-ever loan arranged in 2018 under his conservative predecessor Mauricio Macri, is seeking a deal that will reduce Argentina's fiscal deficit through economic growth, not reduced public spending.

Here is what the minister said:

Q: How do you see 2022 unfolding? Is there a risk of a default?

A: Argentina has a very high trade surplus, which is at the highest levels we have achieved. It was over $15 billion in 2021. What is the balance of payments problem facing Argentina in 2022? It is precisely the debt with the IMF. And that is why it is important to refinance it.

It is important for the country and also for the IMF.

If the IMF pushes Argentina into a destabilizing situation, it will also have less legitimacy in the future when other countries require multilateralism in order to solve their problems with the international community.

If we want to protect each other and protect the workings of multilateralism, it is important to agree on something that is credible. And credible means implementable.

We have a set of economic and social objectives, and of course we want to deliver on our commitments, but we need time. We need to be able to refinance these debts.

We need not, for that time, to be burdened with a conditionality that stops recovery and inhibits Argentina's capacity for development in the medium and long term.

Q: Are you expecting support from the United States as the IMF's biggest shareholder? What do you make of the call by Democratic lawmakers to US Treasury Secretary Janet Yellen to back a review of IMF surcharges on larger, outstanding loans, especially at a time that countries need additional resources to fight the pandemic?

A: That was an important request to the Secretary of the Treasury of the United States to support in the IMF board a review of this policy, which harms countries in crisis that have what is called "exceptional access to the International Monetary Fund."

They are charged more when the situation is worse. That... does not help to fulfil the Fund's mission of ensuring global financial stability. Countries with these interest surcharges lose resources with which to carry out the investments needed to improve repayment capacity.

Q: Where does the disagreement lie?

A: There is nearly agreement on where to converge; what is the primary fiscal outcome (before the payment of interest).

The disagreement lies in the speed (of repayment) and this has to do with differing objectives.

In 2021, with an economy growing at 10 percent, the primary fiscal deficit fell by 3.5 percent of GDP. The fiscal deficit in 2021 was between 2.9 percent and 3.0 percent of GDP -- the figure will be known on January 20. It is a strong decline. Good fiscal consolidation is taking place.

What the IMF has put forward is that there must be faster fiscal consolidation.

But there are two problems: the first is that how they propose it be done would halt economic recovery in the short term. The second is that... it would focus on a smaller expansion of investment in public infrastructure. For us this is critical, because that investment is what Argentina needs most, from a productive point of view. That is where the tension lies.

Q: You have made reference to the difference between a perfect agreement and an acceptable one. Are you getting closer to an acceptable deal?

A: There is no perfect agreement...

What we are looking for is to move forward rather than backward. I'd say we are a little better than we were a week ago, but there is a long road ahead. The frequency (of contacts with the IMF) is not only daily, but several times a day.

N.Fischer--NZN