In Win for Argentina, G-20 statement mentions IMF surcharges

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(Bloomberg) – In a diplomatic nod to Argentina, leaders of the G-20 summit in Rome plan to ask their finance chiefs to review the surcharge policy of the International Monetary Fund.

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A draft G-20 communiqué states that “our finance ministers are eagerly awaiting further discussions on the surcharge policy in the IMF Council in the context of the interim review of precautionary balances.” Two Argentinian officials have confirmed that the statement will likely be included in the final statement to be released on Sunday.

The IMF charges countries a rate of 200 basis points, or 2 percentage points, on outstanding loans exceeding 187.5 percent of a country’s quota, rising to 300 basis points if a credit remains above this percentage after three years.

Argentina, the IMF’s biggest 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 stalled ahead of the midterm elections in Argentina on November 14.

Argentina’s Minister of the Economy, Martin Guzman, based his negotiating strategy on record debt of $ 46 billion owed to the IMF to get the institution to reduce surcharges. President Alberto Fernandez said in a tweet that he had a “good” meeting on Saturday with IMF Managing Director Kristalina Georgieva.

“Negotiations are underway for an agreement allowing Argentina to repay the debt inherited from the previous administration,” according to a statement from the Argentine government. “In the next few days there will be technical meetings with staff to continue the process. “

An attempt to secure temporary relief for the country was already turned down earlier this year, so while this move by the G-20 is promising, it is still far from clear whether the IMF’s board will ultimately agree. a derogation. Markups constitute a significant portion of the fund’s income.

IMF rejects Argentina’s request for temporary relief from surtaxes

(Updates with Fernandez’s comments on his meeting with the IMF’s Georgieva.)

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