Concerned about the advance of the second wave and the increase in infections, Alberto Fernández decided shorten the tour to Europe scheduled for next week, so his first trip abroad this year will be limited to France and Italy. There, it will seek to reinforce the efforts to reschedule the payment in May of US $ 2.4 billion to the Paris Club and agree on a longer program with the IMF.
With Spain and Portugal outside the tour, the new itinerary will include a meeting with the French president Emannuel Macron, your peer from Italy Sergio Mattarella and the prime minister of that country, Mario draghi. In Rome, there will also be a meeting with him Pope Francisor, who last month called for a “significant reduction” of the debt that countries have with the IMF and the World Bank.
Although the trip has not yet been made official, Fernández will be accompanied by a “small” entourage, in which he will participate. Martin Guzman. The confirmation of the Minister of Economy in the delegation was a backup sign in the midst of his failed attempt to fire the undersecretary of Energy, Federico Basualdo, as a result of their differences in rates.
“It is a super small delegation, I suppose it is due to the health situation that they do not want to stretch the tour so much,” official sources told Clarion. The chancellor will also travel, Felipe Solá, the secretary general of the Presidency, Julio Vitobello, and the presidential spokesman, Juan Pablo Biondi. Although the departure date is not yet confirmed, it is expected to be next Monday.
In addition to the crisis triggered by the unusual conflict with Undersecretary Basualdo, the Government faces a challenging financial scenario. Economy this Monday enabled the payment of US $ 300 million to the IMF and after May you have 60 days of grace to pay the US $ 2.4 billion to the Paris Club before going into default. In that case, the country would risk paying more than $ 200 million extra in interest.
In 2020, Guzmán already postponed said expiration when he appealed to the fine print of the current agreement and in a letter to the members of the institution raised the decision to “postpone until May 5, 2021 the expiration of next May 5, 2020” , prior to negotiation with private bondholders under foreign law, but another official document shows May 30 as the initial maturity date.
“The signed agreement establishes that if late payment, basic interest, compensatory interest and final interest are still due as of May 30, 2021, the Paris Club can declare within 60 days of that date, that the RA (Argentine Republic ) is in a state of default with respect to the Paris Club creditors ”, reads an economics instruction on the negotiation.
The tour aims to gain political backing after Guzmán’s trip to Europe in April, where he met with ministers of economy and finance from Germany, Italy, Spain and France, and the head of the Paris Club, Emmanuel Moulin. The minister stated that he was not in a position to pay the maturity of the capital and requested a reduction in rates, which today are 9% and are among the highest.
But from the institution they transmitted that to renegotiate the agreement with Argentina, the country must close the negotiation with the Fund first. This condition represents a serious obstacle for the Government, after Cristina Kirchner and Alberto Fernández raised at the end of March the impossibility of complying with the rates and deadlines of the IMF.
Increasingly high rates In this context, there are still no signs that Guzmán will reach an agreement before the October elections with the Fund, which has already confirmed the sending of US $ 4,350 million to Argentina for the expansion of Special Drawing Rights (SDR). On the other hand, Economía seeks to arrange a meeting with the head of the US Treasury Janet Yellen, with no confirmed date yet.
Unlike the multilateral organization based in Washington, the Paris Club is made up of a group of 22 creditor countries created in 1956 to treat Argentina’s debt and of which Germany and Japan account for 60% of the commitments. The payment due this month is the result of the restructuring in May 2014 by the Minister of Economy, Axel Kicillof.
Said agreement for US $ 9,600 million established a term of five years that could be extended to seven and a payment scheme in that first stage with a rate of 3% and a minimum amount that could increase in relation to investments in the country of the companies based in the partner countries of the European institution. In case of not covering the full payment, the rate would be 4.5%. And after the five years, 9% That was what happened in 2018 and 2019, when only the minimum amount was covered. “The rate is 9% because the previous government did not make the full payment that it should have, with which the debt with the club would have been liquidated. As it did not do so, that clause in matters of interest was triggered, ”official sources pointed out.
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