Argentina Wants IMF Change Before Funds

Argentina is waiting for the IMF to define its role as international financial supervisor, as well as changes in governance to allow more participation by EM countries, before entering into financing talks. It also wants to see what conditions are attached to new financing facilities before borrowing from the fund, with which relations remain strained. “In all three there’s been progress from our point of view, and so we think there will be in the future a new IMF,” Argentine finance secretary Hernan Lorenzino tells LatinFinance. “The new flexible credit line is much better than the previous instruments,” he adds. “We view it with optimism, however we want to find out the details – the devil lies in the details.” Asked whether Argentina is talking to the IMF, the secretary says: “Not yet, we view the fund in a very critical way . . . we want to see how the fund will change.” The government denounced the fund for its role in the last sovereign crisis. However, according to Jerome Booth, head of research at Ashmore, the EM manager of more than $20bn in assets, Argentina needs to get an IMF stand-by. Separately, Lorenzino notes that as a G20 member, Argentina has a responsibility to coordinate countercyclical policy. He declines to state a target for government spend, other than saying that the total is “very dynamic,” and that much depends on how the economy responds to the global crisis. “We’re seeing a slowdown in the economy, it’s not serious yet, but a deceleration,” says the official. Nonetheless, Argentina will have to start solving its multiple financial problems if it is to stay in the G20, according to Booth. Ashmore is an investor in Argentina.