President Fernandez assures the World Bank that he will get Argentina out of recession and will honor the debt

RIO DE JANEIRO, BRAZIL – The President of Argentina, Alberto Fernández, ratified this Wednesday his confidence that the country will get out of the recession and will be able to honor the foreign debt, in a videoconference with the head of the World Bank (WB), David Malpass.

During the conversation, they discussed the domestic social and economic situation and the investment portfolio that the organization has in Argentina with the aim of laying the foundations to achieve a sustainable development in the medium and long term.

The WB chief emphasized the importance of complementing macro stability measures with actions in support of private sector-driven investment, including policies that facilitate the entry of companies and expand access to credit, including through digital financial services.

In a report from Washington, the bank emphasized the need for carefully designed fiscal and trade policies that reduce Argentina’s regressive energy subsidies and support education.

Latin America’s third-largest economy is coming off a recession of nearly 15% over the past three years, with high inflation and poverty and unemployment driven by the coronavirus pandemic. The Minister of Economy, Martin Guzman, recently said that the country could expand up to 7% in 2021.

The government is negotiating with the International Monetary Fund (IMF) to replace a failed program agreed in 2018 during the administration of former President Mauricio Macri, for which Argentina currently owes some US$45 billion to the agency and faces a series of maturities that it cannot cancel.

Read: Kirchner says Argentina ‘can’t afford’ IMF debt

“We are confident that with harmonious and equitable growth we will be able to move forward, paying attention to those who need it most,” said the president according to an official statement. “A process of change is underway in Latin America, and Argentina wants to be able to make its contribution in the region.”

Earlier, Vice President Cristina Fernández stressed in a public act 45 years after the last military coup that “we cannot pay the debt because we do not have the money”, and requested some gesture from the United States to solve the issue after the broad support given to Macri’s administration.

Traders said this statement prompted a jump in JP Morgan’s country risk by 3.3% to 1,573 basis points. Argentine markets remained closed for a national holiday for the ‘Day of Memory for Truth and Justice’.

Argentina has a portfolio of 26 loans with the WB for US$6,149 million, of which 2,066 million remain to be disbursed. The entity ratified its support to approve new investment projects for more than US$2 billion this year in the areas of infrastructure, health, social protection, employment and climate change.

During the conversation between the Argentine President and Malpass, the international situation regarding vaccines against COVID-19 was analyzed and Fernández emphasized the need for an equitable distribution, “since it must be conceived as a global good to which all countries can have access”, concluded the official report.

The IMF executive directors supported a special allocation of 650 billion Special Drawing Rights (SDRs) to alleviate the COVID-19 crisis, for which Argentina will receive the equivalent of US$4,354 million to reinforce the depleted reserves of the central bank (BCRA).

The Minister of Economy, Martín Guzmán, welcomed the agency’s decision as “an important achievement (…) at a very difficult time for the world”.

Source: America Economia