The IMF has decided to lend more, but does not change the mark-ups

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Aware of the current global crisis, the advice of the International Monetary Fund decided to temporarily increase funding limits for member countriesbut there is no news of a possible drop in the overload of loans, which is Argentina’s constant request to relieve its debt.

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At a meeting on Tuesday, the Washington-based organization’s executive committee agreed to increase annual and cumulative funding limits by at least 12 months to “better assist Fund members during an especially challenging and uncertain economic time,” it said. stated. declaration.

This applies to stand-by arrangements and Extended Service Programs (SAF) offered by the Fund. These loans are capped at the amount lent of 145% of a member country’s quota per year (what each nation contributes to the Fund) and 435% for the entire program period.

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The council’s decision raised that limit to 200% and 600% respectively. Countries can continue to borrow above those limits “in exceptional circumstances” as long as certain criteria are met.

As reported by the Fund, the changes are aimed above all at emerging markets and developing countries that face “greater financial pressures and vulnerabilities”, to avoid them falling under the framework of exceptional credits, for amounts exceeding these limits.

just himin Argentina it was awarded an “exceptional access” credit in 2018.because in 2018 it received a loan of approximately US$ 57,000 million, equal to approximately 11 times its share.

While this increase will be maintained for the next 12 months, the Fund has indicated that its staff can propose an extension to the board before the end of that period. It is not the first increase in the funding ceiling decided by the IMF. During the pandemic, between mid-2020 and the end of 2021, the annual cap was temporarily raised from 145% to 245% of each country’s quota.

Despite these changes, the agency continues to maintain the same framework on surcharges. Argentina –first with Martín Guzmán and then with Sergio Massa– He called for these debt-enhancing surcharges on large loans to be lowered or eliminated. Not only is the Government asking for this provision at the headquarters but in international forums such as the G24 and the G20.

For Argentina, the issue of reducing or eliminating surcharges is very important to alleviate the debt burden. The Fund charges a rate of 200 basis points, or 2 percentage points, on outstanding loans above 187.5% of a country’s share, rising to 300 basis points if a loan remains above that percentage after three years .

If the Fund agrees to eliminate them, Argentina could stop paying hundreds of millions of dollars a year.

However, when the matter was formally discussed at a December 2021 session, the board opposed any changes. “Several trustees did not find it necessary to review the surcharge policies or change their design at this stage given the low total cost of the Fund’s loans, noting the critical role of surcharge income in ensuring adequate risk accumulation,” he said the IMF at the time.

Source: Clarin

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