January 2, 2020 / 3:42 PM / 20 days ago

Argentina's Fernandez says social pact sends 'strong message' to IMF, creditors

FILE PHOTO: Argentina’s then-President-elect, Alberto Fernandez, speaks during a news conference in Montevideo, Uruguay, November 14, 2019. REUTERS/Mariana Greif/File Photo

BUENOS AIRES (Reuters) - Argentina’s new President Alberto Fernandez said on Thursday that a social pact with businesses and trade unions sent a “strong message” to creditors including the IMF that the economy must be allowed to grow before the country can pay its debts.

The broad agreement struck last week, a core plank of the new Peronist administration’s plans to revive the economy and rein in inflation, gives Fernandez extra muscle in looming restructuring talks over around $100 billion in debt.

“It is the first time where businessmen, workers and the State come together to tell creditors that Argentina must first grow and then meet its obligations,” Fernandez said in an interview with local station Radio 10 on Thursday.

“It’s a very strong message for the Fund and for creditors.”

Fernandez’s economic team is facing negotiations with the International Monetary Fund and private bondholders over looming debt repayments, which the center-left leader has said the country is not currently in a position to pay.

He argues that Argentina must be allowed to revive its anemic economy, Latin America’s third largest, to raise the funds needed to pay off creditors.

Fernandez added in the radio interview that the relationship with the IMF was positive and praised a “more realistic” stance from the Fund regarding the situation in Argentina.

The IMF has said it shares Fernández’s goals for rebooting the economy, but still needs to know his concrete economic plans before discussing a debt restructuring. Fernandez said he expects an IMF mission to visit but gave no precise date.

Amid creditor talks, Argentina honored payments on international bonds that expired at the end of last month, though it has postponed payments on local debt that had already been delayed under previous president Mauricio Macri.

Reporting by Gabriel Burin; Editing by Adam Jourdan and David Gregorio

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