- About $44 billion of the allotted $57 billion of a previous deal has been paid out by the IMF so far;
- New lending from the IMF will not be part of the upcoming accord, says an IMF official.
Argentina will start talks with the International Monetary Fund (IMF) in the coming weeks aimed at clinching a new program to replace a defunct $57 billion standby lending deal from two years ago.
In 2018, Argentina received the biggest lending package in IMF history in an ill-fated bid to halt a slide in the local peso currency. About $44 billion of the allotted cash has been paid out so far.
“Within the next few weeks Argentina plans to formally request the initiation of conversations for a new program that would succeed the derailed and canceled 2018 program,” said Sergio Chodos, IMF executive director for the Southern Cone.
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“There is no stringent deadline for conclusion of the upcoming talks because the calendar of maturities of principal owed to the fund does not start until September 21, 2021. So the discussion process can be well thought out,” Chodos said.
New lending from the IMF will not be part of the upcoming accord, he added. The government has had to renegotiate about $65 billion in bonds as the country sinks into what is expected to be a 12.5% recession this year.
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“We stand ready to support Argentina, including engaging with the authorities on a new IMF-supported program when the authorities so desire. However, at this stage no request has been made,” a fund spokesman said in an emailed statement.
Argentina currently negotiates a debt restructuring
The government is talking with undecided bondholders about supporting a sovereign debt restructuring deal it reached several days ago with key creditors groups. The government had said it would finalize the bond restructuring before setting out to revamp its IMF agreement.
Argentina’s previous government ran into a cash crunch two years ago after President Mauricio Macri‘s austerity drive, which included cuts to energy subsidies, jacked up electricity bills paid by businesses. Vendors increased consumer prices to help cover their rising energy costs, fueling inflation.
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Macri was voted out of office last year and succeeded by Peronist Alberto Fernandez, who has vowed not to impose fiscal austerity while the country grapples with the fallout from the coronavirus pandemic.