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Argentina bonds fall on split between government and IMF -Breaking

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© Reuters. FILE PHOTO : Martin Guzman (Argentine Economy Minister) gestures during a Reuters interview in Buenos Aires on March 11, 2020. REUTERS/Agustin Martarian/File photo

Jorge Otaola

BUENOS AIRES, (Reuters) – Argentina’s sovereign bond prices fell Thursday as its Economy Minister said that it was difficult for the International Monetary Fund to agree on a refinance of its $45 billion debt. This is due to disagreements over the deficit.

The South American government and the multilateral organization are struggling to reach an agreement, Martín Guzmán told provincial governors on Wednesday, at the closing of the domestic financial market.

U.S.-denominated Argentine bond yields ranged between 16.7% and 23.7% and traded at 30 cents to 36 cents per dollar.

Analysts identified several causes for the fall.

Argentina disagrees with IMF regarding the best way to reduce its budget deficit. Santiago Bulat (economist) stated that Argentina’s government has no plans to achieve fiscal balance by 2027.

Gustavo Ber, an economist, said that “in view of the significant differences with the organization and the search to find internal political support for this position to strengthen it, there are increasing chances of not coming to an agreement on comprehensive economic plans in time due to the large maturities.”

Argentina is facing $4 billion debt payments to IMF for the first quarter, $19 billion total, and a comparable figure in 2023. This includes planned repayments with private creditors, and the Paris Club.

Alberto Fernandez spokeswoman said that the IMF wanted an adjustment program which “compromised the Argentine people”.

Gabriela Cerruti, spokeswoman for the government said that “we hope it can be solved as soon as we possibly can.” “Argentina will not default.”

Due to an increase in spending in the COVID-19 epidemic, Argentina’s primary deficit was 6.5% of its GDP in 2020. It plans to reduce it to 3.3% in 2019, after the country has begun a recovery process with an economy that is expected to grow by around 10% in 2021. 

(Report by Jorge Otaola; Additional reporting by Hernán Nessi and Rodrigo Campos; Edited by Eliana Raszewski and David Gregorio)

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