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To go to the Paris Club, they seek to channel the relationship with the IMF
La Nacion
August 26, 2010

By Javier Blanco

The government began to take tentative steps to repair, at least fomally, its relations with the International Monetary Fund (IMF), after having proven that it is seen as an unavoidable step to achieve its promised normalization of the last debt that the country has in default: US$7 billion that it owes to the member states of the Paris Club. Although, of that total, a little more than US$5.3 billion is demandable currently for being effectively due.

This way, the country would normalize relations with the international financial markets and would manage to reopen a credit window of vital importance to financing public and private investment at more agreeable interest rates for each project, which is what, clearly, they seek with this approach.

Not in vain one of the Cabinet members that is feeding this move is the influential minister of Federal Planning, Julio De Vido, who is seeking to access funds to not run the risk of paralyzing the public works schedule in 2011 which the government is basing much of its electoral strategy.

The complex task, according to what LA NACION could establish and confirmed by the Economy Ministry, will end up back in the lap of ex-Finance Secretary Alfredo Mac Laughlin (who held the post in the second half of the presidency of Nestor Kirchner), who will succeed Pablo Pereira as Argentina's representative to the IMF, where he will also arrive with the good opinions of various of the most emblematic members of its staff.

He is known as the banker which, as the representative in Argentina of Deutsche Morgan Grenfell (the local branch of Deutsche Bank), recommended to Kirchner at the end of the 1990s to take his province's funds out of the country which had been received from the privatization of YPF. At the end of 2005, at Finance, he had the job of financially engineering the payment of a debt with the IMF with reserves, but would leave his post a year later, paradoxically, when he didn't have the final backing of Kirchner to make a deal with the Paris Club, after having worked arduously to get to a deal in principle.

With powers and a difficult mission

Mac Laughlin will formally take office as a member of the IMF board at the end of September, when the next annual joint assembly is held between the IMF and the World Bank in Washington. To lead the Argentine delegation to the organization, he will exercise a portfolio in relations with the rest of the multilateral organizations (the Argentine representatives before the IADB and the World Bank will have to report to him), something that shows he got "special powers" from the Casa Rosada to try to definitively end this story.

Before that, next Monday, the minuet of outreach will have a test in Buenos Aires with the arrival of Mar a de los Angeles Gonz lez, the Venezuelan that will be the new representative of the IMF in the country and will be thrown a reception on that day at the Hotel Panamericano.

Mac Laughlin's first mission will be to normalize the sending of information to the IMF, an obligation that Argentina has not complied with for the past four years, but which has become less sustainable in recent years, when it took up that same commitment as an active member of the G-20.

Without taking that step, any pathway to arriving at a deal with the Paris Club is turned into an inescapable impasse. This was proven to the administration of Cristina Kirchner, which obstinately tried to avoid an IMF audit all this time and, in that attempt, even came to announce in September 2008 that it would pay that debt with reserves, even to the point of issuing a decree (1394/08) to try to set up that payment.

The sensitive points are related to the fidelity of Argentina's statistics (the chief of the IMF's department of statistics, Robert Edwards, has the worst view of the professionalism of the current INDEC authorities) and the exposure of exchange futures that the Central Bank (BCRA) is accumulating, something that the organization made rigorous after the Thailand crisis.

Only if that moves forward will the path be aligned for the arrival of a technical mission into the country in a low profile that would have to commit to delivering its conclusions to the government before making contacts with representatives of the local private sector.

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