The main point of contention on the Todos front regarding the agreement with the International Monetary Fund is whether to set a repayment period for the debts that the Campimos government has taken for 10 or 20 years.. There is $45 billion managed by Mauricio Macri between June 2018, when Argentina received the first payment of the largest loan from the agency in its history, to July 2019, when the last shipment was delivered. This amount of money failed in just 13 months to stem the economic crisis that generated in that administration, which ended in general chaos.
If Argentina had received $45 billion between June 2020 and this month, the prospects for responding to the pandemic and the economic disaster it brought with it would have been radically different.. IFE, ATP, Empower Work Plan, Hospital Construction, Infrastructure, Repro 2, Alimentar Card and all other systems to help businesses and families would have received significant support to expand amounts and coverage.
The central bank’s reserves currently stand at $42,727 million. The Campimos government lost 45,000 million that the International Monetary Fund provided to it. The total escape during the four years of his rule amounted to 86 thousand million. That is, two reserves were slipped.
The reference is well known, but it is necessary to frame the debate. Otherwise, he imposed reducing the advisers and media professionals who accompanied the stage of unbridled indebtedness regarding the internal disputes of the ruling party, and concealing their responsibility for the disaster that they left and must be fixed.
Instead of receiving emergency funds, Argentina suffering from a pandemic had to pay. Alberto Fernandez said Friday that it is necessary between now and the end of the year to return $5,000 million to the International Monetary Fund. So far in 2021, $900 million has already been paid.
The agency, in turn, will go to $4.3 billion in late August or early September for capitalization decided by the major powers, as relief for countries linked to them due to the health crisis. It is not a loan, because it is not in a foreign currency that it must be repaid. It is exceptional assistance, as it was implemented in 2008 after the global financial crisis and centered in the United States.
The government is making progress in negotiations with the International Monetary Fund on a 10-year agreement. Martín Guzmán explained that this is the maximum that the organization offers in its current legal structure. There are no long term programmes.
The minister explained that Argentina will only sign a new agreement if it includes a clause ensuring the country has access to better funding lines if the agency subsequently implements it.. He understands that the world is heading in this direction, the same direction that the national government is pushing, and that solutions will be conquered and perfected over time.
An example is the global tax on multinational corporations, he states, which the country demanded at the G20 Economic Ministers Summit last year and is now a reality based on the impulse of the new US government and the support of the G7.
The government’s strategy is to agree with the Fund in the best possible conditions in the current situation and to obtain new credits or more appropriate support mechanisms at a later time.
“We need to update the credit lines of the multilateral development banks. Markets will not provide the kind of financing economies need to tackle the problems of inequality, climate change, and digitalisation. Multilateralism is a way to find solutions. We are positive and we hope that we will work together to achieve this effectively,” the minister relayed this Friday during his participation in the meeting of G20 economic ministers in Venice.
In any case, in order to sign a new program with the International Monetary Fund, the government is demanding the abolition of additional fees for exceeding a limit that can be borrowed. Since Macri’s government has far exceeded the amount of credit a state can aspire to for its body share, it must now face additional fees of $900 million to $1,000 million annually in interest..
Guzmán has already told the fund that there is no possibility of reaching an understanding if this is not cancelled. The difference is about $10 billion in ten years. It is a cost that we cannot accept. If there is a political arrangement to give extraordinary resources to the Campimos government, the IMF now has to accept a political solution as well,” they say in Palacio de Hacienda.
Maximo Kirchner, of Congress, put the whole thing in another way: “Do you think the loan can be paid off within 10 years?” If we do not agree to negotiate this debt, the investment that the private sector needs will be impossible. You cannot serve two masters.”warned this week when presented in the House of Representatives. “We have this – the debt – and we have to solve it. I don’t want to imagine how we will bring the growth and development that Argentina needs in line with the people with what the Fund wants.”
The argument in the ruling party, in short, is between negotiating a 10-year agreement and continuing to work in the international arena for other support and funding, or not directly accepting an agreement if it is not for 20 years.
In the ranks organized together for change, there are no voices acknowledging mistakes or suggestions on how to move forward. Internal disagreements still exist between those who wanted a shock adjustment and those who suggested that the adjustment should be gradual in the Macri years. The economists and leaders appearing on the rolls in the next election are basically the same as they were then, and their ideas have not changed.