Wednesday, February 21

IMF: Guzmán still insists and presses to achieve interest reduction

In an interview published yesterday in the Spanish newspaper El País, Guzmán said that “Argentina is ready to move forward, but there is still a lack of understanding on the part of the international community. The reception of a good part has been growing, the support of a good part of the international community has been built ”. Knowing the scope of the medium, what the minister seeks with the declaration is that the countries on which the voting in the board depends, take into account what is being demanded from Buenos Aires.

Only with a minimum of 85% of the guarantees could it be authorized for the Fund’s line technicians to apply for the country a payment plan outside of the only mechanisms authorized by the organization’s charter: stand-by and Extended Facilities , both in all their possible variables. As what the country proposes is an alteration of the norms, only a vote of more than 85% could endorse the request, and only with the vote of the United States could it be achieved.

This country holds 16.74% of the shares of the IMF, so to obtain the majority of 85% it is essential to have the endorsement of Joe Biden’s administration. Yes or yes. Following a maxim of “albertism”, “with Biden it is not enough, but without Biden it cannot”. According to the numbers that are made in the Palacio de Hacienda, if a call from Fernández achieved this support, the country would already exceed the necessary 85% and would reach almost 90% of the votes. Only what Japan would do (6% of the votes), the Nordic countries (3.43%) and other European states, in general and traditionally reluctant to support the country (they did not do so in the time of Mauricio Macri), would remain in doubt.

On the issue of votes on the board, the situation is clearly marked. Each sovereign state has a percentage of votes depending on its GDP, reserves and direct contributions to the operation of the Washington-based body. Any normal agreement (stand by or Extended Facilities) is approved with a minimum percentage of 70%; but a majority of the 85% is needed for special plans or alterations to the Organic Charter. Among the most recent cases, this majority was necessary in cases such as the Greek crisis of 2010 and the Portuguese crisis of 2011.

The need to achieve this percentage was what played against Argentina in 2001, when the last disbursement committed in the current agreement was disapproved by the board of directors due to the refusal of the United States to endorse the proposal (on the direct recommendation of number two of those years, Anne Krueger); as well as the approval of the 2003 pact when Néstor Kirchner negotiated directly with George Bush a quota plan outside the current treaties.

In the current case, it is also essential that the North American director endorse the request, since his vote for or against (or his abstention) will define the fate of the Argentine proposal. In total, the board is made up of 24 executive directors who represent different levels of power within the body in percentage terms. The United States, Japan, Germany, France, and the United Kingdom may elect a director without assistance from any other country. China, Saudi Arabia and Russia de facto elect one director each; while the remaining 16 choose it according to state blocks. Argentina, through the local envoy, Sergio Chodos, occupies the group with Bolivia, Chile, Peru, Paraguay and Uruguay.

There is still an important raid that must combine diplomacy in all its facets, including all the embassies of the countries involved in the vote. As well as a direct and personal action by Alberto Fernández on Biden; Who at this point depends on whether Argentina achieves, or not, the reduction of the cost overruns that the country should pay in an Extended Facilities.

“Today all the guns are aimed at accelerating the understanding by the international community, by all IMF shareholders, about the operation of the Argentine economy and what would constitute a program to give continuity to the strong economic recovery that today Argentina is living ”, added Guzmán in the interview. The vote of the IMF board is at stake, an event that could take place in February, and on which a large part of the financial, fiscal and commercial luck of the country in 2022 will depend.