Argentina is unable to repay its $45 billion debt with the International Monetary Fund under current negotiating conditions, influential Vice President Cristina Fernandez de Kirchner said Wednesday, diminishing the possibility of an agreement with the country’s largest creditor.
“We can’t pay because we don’t have the money to pay,” Fernandez de Kirchner said at an event in Buenos Aires, adding that the terms and conditions are “unacceptable.”
Fernandez de Kirchner’s comments come after discussions between Economy Minister Martin Guzman and IMF Managing Director Kristalina Georgieva in Washington on Tuesday that what was described by both sides as a “very good meeting.”
The hardline stance from Fernandez de Kirchner, who battled with creditors during her eight years in office from 2007 to 2015, may help bury the already diminished prospects for a deal to get done before key midterm elections in October. President Alberto Fernandez leads a broad Peronist coalition, and Fernandez de Kirchner comes from a more radical but important left-wing group.
“Key players in the government’s coalition would prefer to be perpetually at war with the Fund,” Benjamin Gedan, director of the Argentina Project at the Wilson Center, a Washington-based think tank. “That attitude is not productive and complicates the economy minister’s efforts to negotiate a new program.”
Spokesmen for Argentine President Fernandez and the Economy Ministry didn’t respond to requests for comment.
Also on Wednesday, Argentina’s Foreign Ministry announced that the nation is formally leaving the so-called Lima Group of western hemisphere nations who seek a peaceful transition of power from Nicolas Maduro’s government in Venezuela. Moves to isolate Maduro’s government “haven’t led to anything,” and the inclusion of his Venezuelan opposition in the bloc has led to positions that Argentina can’t join, the ministry said in a statement.
Argentine dollar bonds maturing in 2030 fell 0.9 cents on the dollar to 34.15 cents on Wednesday. The bonds edged lower after Fernandez de Kirchner’s comments. Argentina restructured its debt with bondholders last year and is still trying to reschedule payments with the Washington-based lender.
The cost to protect against losses on Argentina’s debt jumped to the highest level since the country emerged from default last year. Credit-default swaps linked to the nation rose 1 percentage point to an upfront cost of 39 percentage points, according to ICE Data Services. That means it would cost $3.9 million upfront to insure $10 million of Argentina bonds.
An IMF spokesperson declined to comment on Fernandez de Kirchner’s remarks.
In the speech, Fernandez de Kirchner was flanked by Axel Kicillof, the governor of Buenos Aires Province and her son Maximo, who is a lawmaker. She called on the opposition to help seek better terms from the fund since they are responsible for taking on the debt under former President Mauricio Macri.
“We are not saying to not pay the debt,” Fernandez de Kirchner said. “Our political group was the only one that paid the debts of all the other governments. We should make an effort, the ruling party and the opposition, to give us a longer term and a different interest rate on a debt that others have contracted.”