Argentina Calls on IMF to Reschedule Debt
Buenos Aires calls for help. Argentina on Wednesday asked the International Monetary Fund (IMF) to reschedule its $ 57 billion debt in exchange for fiscal austerity, with its first repayments expected in 2021, the minister said. Finance, Hernan Lacunza. “Argentina has proposed (to the IMF) to initiate a dialogue to reschedule its debt,” said Lacunza, named a little over a week ago.
In the wake, the IMF said it was studying the request, and assured “to be with Argentina during these difficult times.”
— Gerry Rice (@IMFSpokesperson) August 28, 2019
These statements come a few days after the visit of a technical mission of the Fund in Buenos Aires where the economic crisis worsened after the electoral setback of President Mauricio Macri. The center-left Peronist Alberto Fernandez is the favorite in the presidential election of October 27, after his wide victory in the primaries of August 11 when he won 47% of the vote, far ahead of the outgoing, Mauricio Macri (32%) who is seeking a second term.
Overwhelmed by two currency crises in 2018 that caused its currency to lose 50% of its value, Argentina called on the IMF to rescue a loan of more than $ 57 billion. In exchange, the country is committed to balancing its accounts. The first repayments are expected in 2021.
The recourse to the IMF in 2018 was 12 years after the early repayment of $ 10 billion in 2006, when former President Nestor Kirchner decided to break with the Fund. At that time, the price of soybeans and agricultural raw materials exported by Argentina were blazing on the international markets.
In 2001, the South American country, unable to meet the repayment deadlines of its debt, had experienced the largest defaults in history and a serious economic and social crisis that had traumatized Argentines and markets. Markets have shown signs of nervousness in recent days, seeing the specter of a default in payment.
Former Argentine finance minister Nicolas Dujovne resigned on August 17 after a week of market turmoil that saw the peso lose more than 20% of its value and the stock market dive more than 30%.