New York
After reaching a $65 billion restructuring agreement in principle with its creditors earlier this month, Argentina must now turn to relief from the Interna-tional Monetary Fund to free up cash in the near term, the IIF said on Tuesday. “We think external financing will be comfortable if the IMF rolls over its exposure,” the Institute of International Finance said in a note.
The agreement with creditors gives Argentina much-needed breathing space. Cash flows into and out of the country have ground to a halt, partly due to capital controls and the nonpay-ment of obligations during the debt negotiations. “As long as capital controls remain in place, resi-dent capital flight will not be a source of pressure,” said the IIF. Payments to the IMF could quickly become unsustainable under the current schedule. The large payments due to the IMF stem from hav-ing received the largest-ever program from the Fund in 2018.
Beyond that new agreement expected with the IMF, investors are focused on Argentina’s me-dium-term economic plan, according to Sergi Lanau, deputy chief economist at the IIF. Prudent fiscal policy has been hard to come by for Argen-tina, Lanau said”—Reuters
