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Goldman Sachs on Argentina & IMF

ARGENTINA
  • Reaching an agreement with the IMF, to reprofile close to US$40bn in debt repayments in 2022-23, remains an open issue with a difficult and uncertain resolution given the authorities’ hesitant disposition to embrace policy-based macro adjustment.
  • Investors have been waiting and hoping for a new IMF program since Argentina’s last debt restructuring operation (Aug 2020). But not all programs are alike, and the probability of a failed negotiation, or failed program is not low.
  • Investors are rightly concerned that a light IMF program that does not induce tangible near-term macro rebalancing will not move the policy needle and therefore will fail to improve macro performance and allow Argentina to regain access to voluntary funding markets.
  • Conversely, a traditional full-fledged IMF program with a robust policy matrix would be to the ultimate benefit of Argentina, but that may not be acceptable to the authorities or, if accepted, would possibly fail (be off track after the initial review(s)) due to a questionable program-ownership and erratic implementation.
  • In either case, GS do not expect the near-term macro picture to improve significantly, even with an IMF program. While a program may not be the harbinger of better polices and macro performance, failing to reach an agreement would send a negative signal and make a complex macro situation even worse, potentially unmanageable.
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