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The Paris Club awaits a payment plan from Argentina and insists on including the IMF
El Cronista
September 07, 2010

By Esteban Rafele

The creditor countries believe that any option for paying off the debt in installments is not viable without the backing of the Fund. Resistance continues toward the organization's mission.

As it always happens whenever Argentina shows its intention to reach an accord with the Paris Club, the creditor countries say again that they will not back any payment plan that does not have the backing of the International Monetary Fund (IMF). Thus, the options for the government to definitively exit the default seem to be reduced to two: pay the money they owe in a lump sum, or include the IMF as a "guarantor" of a payment in installments.

Thus said sources yesterday from creditor countries, after various Argentine officials put out in recent days the government's intention to retake up negotiations to pay the US$6.7 billion that Argentina owes in installments.

In its edition yesterday, El Cronista reported that the payment to the Paris Club will be part of the agenda of the visit by President Cristina Fernandez to German Chancellor Angela Merkel on October 6th. It will also be a topic of conversation during the Annual Assembly of the United Nations in New York, beginning the 24th of this month. And, by all means, of the joint annual meeting of the IMF and the World Bank, which will take place between the 8th and 10th of October in Washington.

Germany is the main creditor country, with 30% of the debt. During repeated meetings with officials from Hacienda, the European state made it clear it will not back any agreement that does not include the IMF.

Something similar is happening in the United States, a country that has less than 10% of the US$6.7 billion debt that Argentina owes, but a considerably heavier political weight.

The United States showed some signs of backing the Argentine position, like the blocking of the initiatives of the vulture funds against the country in Congress. But from the Barack Obama administration, they argue that the legislative branch would not authorize the backing of a payment plan that excludes the IMF and contradicts the Paris Club's arrangement.

And they recall that the creditor countries demand more money than Argentina is recognizing, for the way in which interest is calculated. Thus, some argue that even a cash payment would have to be negotiated.

From the technical staff of the Economy Ministry, led by Amado Boudou, they say that the payment to the Paris Club will be a political decision. They rule out a last minute "win-win" which consists of arranging benefits with the creditor countries for investing in the country.

The arrival of Nestor Kirchner's man, Alfredo McLaughlin, as Argentina's representative to the IMF, they believe, could restart the game. But first, the delegation that is participating in the next summit of the G-20 will have to hear once again that Argentina is the only country in the group that is not allowing the IMF to review its economy as stated in Article IV.

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