Argentina’s Fernandez: social pact may help with IMF negotiations

New president says the broad agreement between the government and businesses gives him extra muscle in IMF talks.

Alberto Fernandez Cristina Fernandez de Kirchner Argentina
Argentina's President Alberto Fernandez and Vice President Cristina Fernandez de Kirchner wave to supporters outside the presidential palace after winning an election where he promised to revive the South American country's economy [FIle: Daniel Jayo/The Associated Press]

Argentina‘s new President Alberto Fernandez said on Thursday that a social pact with businesses and trade unions sent a “strong message” to creditors, including the International Monetary Fund, that the economy must be allowed to grow before the country can pay its debts.

The broad agreement struck last week, a core plank of the new Peronist administration’s plans to revive the economy and rein in inflation, gives Fernandez extra muscle in looming restructuring talks about Argentina’s $100bn in debt.

“It is the first time where businessmen, workers, and the state come together to tell creditors that … Argentina must first grow and then meet its obligations,” Fernandez said in an interview with local station Radio 10 on Thursday.

“It’s a very strong message for the Fund [the IMF] and for creditors.”

Fernandez’s economic team is facing negotiations with the IMF and private bondholders over looming debt repayments, which the centre-left leader has said the country is not currently in a position to pay.

He argues that Argentina must be allowed to revive its anaemic economy, Latin America’s third-largest, to raise funds needed to pay off creditors.

Fernandez added in the radio interview that the relationship with the IMF was positive and praised a “more realistic” stance from the IMF regarding the situation in Argentina.

The IMF has said it shares Fernandez’s goals for rebooting the economy but still needs to know his concrete economic plans before discussing a debt restructuring. Fernandez said he expects an IMF mission to visit Argentina, but gave no precise date.

Amid creditor talks, Argentina honoured payments on international bonds that expired at the end of last month. However, it has postponed payments on local debt that had already been delayed under Argentina’s previous leader, President Mauricio Macri.

Source: Reuters