Shunned in global financial markets, Argentina is seeking about US$ 5 billion for next year from multilateral organisations other than the International Monetary Fund as it negotiates a larger refinancing programme with the Washington-based lender, according to three people familiar with the plans.
Alberto Fernández’s administration is looking to institutions including the Inter-American Development Bank and the World Bank, said the people, who asked not to be named because discussions are private. Plans are in the early stages, and the borrowing needed is an approximation that could wind up being more or less depending on variables like government revenue and exports, the people said.
The funds would be used to achieve fiscal sustainability as the nation comes up with a multiyear macroeconomic plan to present for IMF approval, the people said. Fernández’s government has said it would prefer to avoid asking for fresh funds from the IMF as it negotiates to delay payments on about US$ 45 billion from a failed programme under the previous government. The nation’s access to global debt markets is limited after a default of its overseas debt in May and a debt restructuring three months later.
The Argentine Economy Ministry press office declined to comment. Teams from the Fund and the Fernández government “continue to have a very constructive and close engagement as the Argentine authorities continue to outline their economic plans,” the IMF press office said in a statement to Bloomberg News, declining to comment on specific financing needs.
It’s unclear whether lending from the IDB and World Bank will be enough, and Argentina may still need to come back to the IMF before the full programme is negotiated. IDB lending to Argentina has recently averaged US$ 1.36 billion per year and World Bank loans about US$ 1 billion – less than half the funding Argentina plans to seek in 2021. Both institutions concentrate their lending on specific social programmes, infrastructure or projects over years rather than to cover shorter-term fiscal needs.
Project financing
Argentina is in talks with the IDB for infrastructure project financing and also is discussing a policy-based loan, a type of credit that provides flexible funding to support reforms, the people said. The IDB is working to support Argentina’s request, and Richard Martínez, the bank’s vice-president for countries, is coordinating conversations among the lender, Argentina and the IMF, according to one of the people.
Martínez, who joined the IDB just last month, knows the IMF officials well from his work as Ecuador’s finance minister over the past two years. The nation in 2019 negotiated a US$ 4.2-billion programme with the Fund that was part of a broader effort with almost US$ 2 billion more from the IDB, World Bank, the regional development bank known as the CAF and the Latin American Reserve Fund. That IMF programme was overwhelmed once the pandemic hit and replaced earlier this year.
“The IDB will continue working closely with Argentina and the IMF as discussions proceed,” the bank’s press office said in a statement, without providing further details.
If Argentina asks the World Bank to significantly increase support for Argentina, any decision would be “assessed on the basis of the macro-framework at the time of the request as well as our availability of resources given the tremendous demands on our institution from countries around the world during these difficult times,” said Jordan Schwartz, the bank’s director for the nation.
The lending that the World Bank has planned for next year is focused on social protection to help poor households deal with the pandemic, and infrastructure expansion and improvement, Schwartz said.
As part of their negotiations, Argentina has asked the IMF for an extended fund facility, a programme that would give the country at least a four-and-a-half year grace period to start paying its debt back once it’s approved. Argentina seeks to reach a deal with the Fund before April.
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by Jorgelina do Rosario & Eric Martin, Bloomberg