In Win for Argentina, G-20 Statement Mentions IMF Surcharges
In a diplomatic nod to Argentina, leaders at the G-20 Summit in Rome are planning to ask their finance chiefs to look at the surcharge policy at the International Monetary Fund.
A draft of the G-20 communique mentions that “our finance ministers look forward to further discussion of surcharge policy at the IMF Board in the context of the precautionary balances interim review.” Two Argentine officials confirmed the statement will likely be included in the final communique to be published Sunday.
The IMF charges countries a rate of 200 basis points, or 2 percentage points, on outstanding loans above 187.5% of a country’s quota, increasing to 300 basis points if a credit remains above that percentage after three years.
Argentina, the IMF’s largest debtor, has proposed that countries be exempted from paying surcharges amid the financial and economic burden of the pandemic. Talks on a new IMF program have stalled ahead of the Argentina’s midterm elections on Nov. 14.
Argentine Economy Minister Martin Guzman has pinned his negotiation strategy over a record $46 billion debt load due to the IMF on getting the institution to lower the surcharges. President Alberto Fernandez said in a tweet that he had a “good” meeting on Saturday with IMF Managing Director Kristalina Georgieva.
“Negotiations are ongoing for an agreement that allows Argentina to repay the debt inherited from the previous administration,” according to a statement from Argentina’s government. “In the next few days there will be technical meetings with the staff to continue the process.”
An attempt to obtain temporary relief for the country was already turned down earlier this year so while this G-20 gesture is promising, it’s still far from clear whether the IMF board will ultimately agree to a waiver. Surcharges are an important part of the fund’s revenues.
By Patrick Gillespie and Samy Adghirni