Debt Relief Closer: IMF Finds Argentine Debt Situation “Unsustainable”

RIO DE JANEIRO, BRAZIL – After the end of a one-week visit by a delegation of experts from the International Monetary Fund (IMF), a debt cut for Argentina seems to be one step closer. In its final statement, the IMF assessed the level of debt as “unsustainable” and now intends to pursue a plan to restore the South American country’s “debt sustainability”.

Concurrently, the IMF continued to express its satisfaction with the government of President Alberto Fernández and Minister of Economy Martin Guzmán, who took office in December.

Measures had already been taken to counter increasing poverty while stabilizing the economy. Capital controls and a trade surplus have helped to stabilize international reserves and the Argentine peso, and there is confidence that further improvement in the fiscal and trade balance can be achieved, the IMF said.

However, the development of the debt crisis is so severe, partly due to the country’s vulnerability to exchange rate fluctuations and “the large share of public debt in foreign currency”, that “a definitive debt operation – with a meaningful contribution from private creditors – is required in order to help restore debt sustainability with a high probability”. Private creditors would now also need to “make a valuable contribution”.

At the G20 finance ministers’ meeting in Saudi Arabia, which began on Thursday, IMF Director Kristalina Georgieva plans to meet with Economics Minister Guzmán to discuss the next steps in IMF commitment to Argentina.

The administration of Mauricio Macri, who was voted out of office in October, and Christine Lagarde, now head of the ECB and Georgieva’s predecessor at the IMF, did not help the IMF’s contributing member countries or private creditors by granting Argentina the highest loan in the IMF’s history.

Quite the opposite: critics of Macri and Lagarde claim it is now obvious that Macri and the IMF joined forces and placed Argentina in an extremely precarious situation