Despite the government’s claims of ease the interest burden due to be paid to the IMF, the agency has not yet agreed to a change of its surcharge policy. The board of directors discussed on Monday of this week the possibility of reducing the surcharge on the most indebted countries, generally low- and middle-income, as in the case of Argentina, but the authorities They disagreed still.
The debate took place while the government awaits the definition of the board of directors of the CEO new disbursement of US$ 5,900 million before the Fund goes into winter break. In this framework, the agency has revised its precautionary balances, an instance in which every year it evaluates the mechanisms for protecting its reserves from potential financial risks and within which, Flight attendants are a major source of income.
“As part of this review, the Council also discussed the role of mark-ups, iincluding the merits of possible changes in policy. In general, views on the surcharge policy changes continued to diverge, including on the merits of a temporary waiver of surcharges,” an IMF spokesman said, following Monday’s board meeting, the second in which it was discussed. the matter since Argentina initiated the request.
In mid-November, the President and Sergio Massa reiterated their interest rate cut requests before the head of the IMF, Kristalina Georgieva, at the G20 summit in Bali, Indonesia. Together with Argentina, Pakistan and Ukraine are also asking for help. But the countries that have the greatest weight in the Fund, such as the United States, are opposed because the institution you need to recover the loaned funds and repayment mistrust in countries like Argentina.
After the wave of financial crises of the 1990s (Mexico in 1995, Russia in 1998, Brazil in 1999 and Argentina in 2001), the IMF relaxed the conditions for lending money. In Washington they concluded that the previous limits had been very strict and the cost of contagion was very high, so it was decided expand funding in exchange for a surcharge act as an incentive for timely repayment of claims.
Today, Argentina Pays 6.44% Interest Rate on 2018 US$44,000 Million Loan. The financial charge is made up of a base interest rate of 3.44 points on the residual balance of the debt (approximately US$ 39,000 million) and another 3 points of increase for having accessed a loan exceeding 187.5% of the its share and be in this situation for more than 3 years, a variable that makes the loan even more onerous.
Therefore, the interest paid to the Fund amounted to US$1,872 million in 2022 and next year they will catch up 2,436 million dollars, a 30% increase, according to agency data. The increase is due to the rise in the Special Drawing Rights (SDR), the basket of currencies in which the Fund’s credits are valued, to the rise in FED rates in the USA and to new interest generated by IMF disbursements after the close of the agreement in March.
The government is also calling for a more equitable distribution of SDRs, the implementation of the Resilience Fund and relief from the impact of the war in Ukraine, which cost the local economy $5,000 million, according to the Ministry of ‘Economy. But these statements clash with Washington’s feeling that Argentina is benefiting from rising food prices and the country’s energy resources.
While the board has not rejected outright the possibility of a surcharge reduction, it is very likely that Argentina will have to wait for a new assembly to look into the issue, implying that it will face the same financial burden in the near term. . For now, the agency has confirmed that it will release a staff report in the coming days detailing the discussion at last Monday’s meeting.
Source: Clarin
