The IMF released another statement on Argentina on 22 February, following a planned meeting between IMF Managing Director Kristalina Georgieva and Argentina's Economy Minister Martín Guzmán at the G20 in Saudi Arabia. We note two things from the short statement. First, it continues the theme of noting useful exchanges between the two sides, but doesn't add anything substantive on policy discussions. This follows some criticism of the IMF's end of mission statement last week in which the Fund called for a debt restructuring, but without providing a detailed assessment of the authorities' plans or policy commitments, nor the macro assumptions which underline the IMF's conclusions. This raised concerns that the IMF has gone soft on Argentina.
Second, the weekend's statement provides a bit more insight into the nature of the government's future engagement with the Fund. Specifically, it states that the authorities are committed to deepen its engagement with the Fund through an Article IV and steps towards a Fund-supported programme in the future, the modalities of these next steps to be discussed. We think this is interesting because it suggests to us that a programme is not imminent; it is still not clear whether the authorities really want one, it doesn't sound like they have yet requested one, and a commitment to talk about one is only that – it can always be dropped.
Rather, it sounds like the basis of the engagement in the near-term is expected to be through the Article IV consultation – a standard obligation of all IMF members typically undertaken every twelve months (although some countries fail to fulfill this, as Argentina has in the past under the Kirchners, or do so with delays). Argentina's Article IV is becoming overdue. The last one was in December 2017, although that one hasn't taken place since could be accepted given Argentina was later subject to regular reviews under its SBA programme. However, the SBA is now defunct, the last programme review was in July 2019 (some seven months ago), so it may be no surprise now that the IMF wants to do a new one, especially given the size of its exposure and Argentina's poor history with the Fund. An Article IV would be a useful stock to take under the new government. The implication of resuming the Article IV, however, is that this further downgrades the timing of a programme, in our view.
In fact, reading between the lines, we imagine the conversation was something like: "If you don't want a programme, then we (the IMF) will have to complete an Article IV, and do so soon."