Argentina and IMF discuss debt in shadow of 2001 crisis

BUENOS AIRES, Argentina (AP) — Argentina has been here before: recession, growing poverty, high inflation, billions of dollars in debt, a looming deadline for repayment and simmering anger toward the International Monetary Fund.

This is a big week for one of Latin America's biggest economies, which is hosting an IMF team for talks on restructuring $44 billion in debt owed to the lender. All involved are anxious to avoid a replay of 2001, when Argentina defaulted on about $100 billion in debt during the worst economic crisis — and there have been many — in its history.

Once again, Argentina doesn't have the cash to pay creditors, and is desperate for relief from its total debt burden, also valued at around $100 billion. It's a balance for President Alberto Fernández, who seeks a deal with the IMF that does not alienate his leftist base, as represented by his deputy and former president, Cristina Fernández de Kirchner.

“It will be a frantic negotiation to put an end to austerity, restructure commitments with the fund, and get the latter’s green light to pursue a renegotiation with private bondholders, all by 31 March 2020,” Verisk Maplecroft, a consulting company based in Britain, said in a report.

“I think the fund is willing to help Argentina, but in order to do that, it's necessary for the Argentine authorities to steer away from interventionist and heterodox policies and show clear willingness and ability to improve the fiscal situation in no more than two to three years,” said Alberto Ramos, chief Latin America economist for Goldman Sachs.

At the time of the 2001 default, the relationship between Argentina and the IMF grew increasingly strained. The IMF later acknowledged shortcomings, including a failure to identify vulnerabilities in the Argentine economy during its boom years.

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