Banking - Argentina

IMF sidelined in Argentina, Paris Club accord

IMF sidelined in Argentina, Paris Club accord

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In what appears to be a major victory for Argentina, the IMF has confirmed to BNamericas that it will play no role in the monitoring of the implementation of the deal reached between Argentina and the Paris Club and that it was not included in the negotiations.

According to a local press report, the exclusion of the IMF was agreed by the creditors in return for a larger down payment by Argentina.

In a carefully worded statement to BNamericas an IMF spokesperson said: "As we have repeated many times, the IMF has an observer role at the Paris Club. As such it is not involved in talks between Argentina and the Paris Club on the modalities of a repayment plan for the country's arrears with its members. This is a matter for the creditors and Argentina. Let me also add that the Fund [has] not been asked by the Paris Club to help in monitoring the implementation of the proposed agreement."

However, the statement from the Paris Club also noted the presence of both the IDB and the World Bank at the meeting as observers with the important omission of the IMF.

For some this was unheard of. Indeed, at the start of the year, following the initiation of talks between the parties, Thomas Laryea, partner at international law firm Dentons and a former assistant general counsel at the IMF, told BNamericas that he expects the Paris club to insist on some type of IMF monitoring through surveillance before it agrees to a restructuring of the debt.

Talking to BNamericas, Charles Blitzer of Blitzer Consulting and a former senior IMF official with extensive experience in sovereign debt restructurings, said: "I am unaware of any prior cases in which the IMF was not an observer."

This was also the view of the Argentine government's cabinet chief, Jorge Capitanich, who noted in an address to reporters that this was the first time in which the IMF was not involved in negotiations.