IMF says talks with Argentina aimed at new loan program

FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington
FILE PHOTO: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo

July 15, 2021

By David Lawder

WASHINGTON (Reuters) -The International Monetary Fund and Argentina are negotiating towards a new Extended Fund Facility program to deal with the South American country’s $45 billion debt to the Fund, an IMF spokesman said on Thursday.

Gerry Rice told a news briefing that there have been “very productive discussions over the last several days” between IMF staff and Argentine authorities, but declined to provide a timeline for a potential agreement.

He said the discussions have centered on Argentina’s policies to promote economic recovery and stability, job creation and developing domestic capital markets to mobilize domestic revenues.

Asked whether Argentina would be considered a “vulnerable” country and be eligible to receive additional IMF Special Drawing Rights after a $650 billion allocation is completed, Rice said such lending facilities were still being designed.

“On the question of what would constitute a vulnerable country, we’re not quite there yet in terms of defining what that would mean,” Rice said.

The IMF is on track to distribute the $650 billion reserve allocation to member countries in proportion to their membership by the end of August. Argentina, with 0.67% of the IMF’s current quota resources, would get about roughly $4.4 billion worth of SDRs directly.

Rice said the IMF’s Poverty Reduction and Growth Trust could act immediately as a vehicle for wealthy countries to channel their excess SDRs to low-income countries. But a date for launching the IMF’s proposed Resilience and Sustainability Trust, which could allow more SDRs to be directed to some vulnerable middle-income countries, has not been determined.

(Reporting by David Lawder; Editing by John Stonestreet and Paul Simao)