The Argentine government’s election loss on Sunday weakens Economy Minister Martin Guzmán’s negotiating power with the International Monetary Fund over its record US$45-billion debt, according to one of the nation’s former representatives with the Fund.
President Alberto Fernández’s coalition was defeated in primary congressional races in the majority of Argentina’s provinces, as well as in the capital, reflecting discontent over rising poverty and 50 percent inflation ahead of the general midterms on November 14.
“The worst that we could have is a weak minister of economy dealing with an IMF that requires strong commitments from the government,” said Héctor Torres, who served on the IMF’s executive board representing Argentina and other nations. “I wouldn’t be surprised if Guzmán leaves – he’s been hanging onto the job despite strong criticism from the government’s coalition.”
Talks with the IMF stalled earlier this year but were expected to pick up momentum right after the November vote. Argentina must pay more than $4 billion to the IMF before the end of the year, including a $1.9 billion payment on Sept. 22.
The government has intended to use the IMF’s new reserves to cover those payments, but it’s unclear if the primary results have changed that thinking. An Economy Ministry spokesman declined to comment. Argentina made a commitment to a group of rich nations known as the Paris Club to reach a deal with the IMF by March 2022.
Guzmán is aiming to negotiate a 10-year deal with the IMF, known as an extended fund facility. However, Fernández and Guzmán have sparred with the Fund over a surcharge policy and seeking a repayment period beyond 10 years. More importantly, Fernández has implemented a patchwork of unconventional policies in his first two years without unveiling a big-picture economic plan that’s essential to all IMF deals.
by Patrick Gillespie, Bloomberg