economics

Ex-Argentina IMF Point Man Sees ‘Panic’ If Macri Fumbles Message

  • Daniel Marx says government must address financial market fast
  • Investors will continue selloff without clear policy message

IMF Credit 'Cheap Financing' for Argentina, Says Goldman's Ramos

The Argentine government must do a better job of communicating with financial markets as it seeks help from the International Monetary Fund, said Daniel Marx, the country’s veteran negotiator with the Washington-based lender.

“Somebody from the government need to address the market fast,” said Marx, who was finance secretary between 1999 and 2001 during Argentina’s economic crisis and is now executive director of Buenos Aires-based research company Quantum Finanzas. “Without a clear message, people will continue walking away and panic may arrive.”

Sebastian Tabakman and Yael Bialostozky, spokesmen for the Treasury and Finance Ministries respectively, didn’t immediately reply to calls and messages seeking comments.

Major Debt Burden

Argentina faces over $111 billion in payments over the next 10 years

Note: Argentina has debt maturities up until 2117, when it will finish paying century bond

Source: Bloomberg

The Argentine peso, already the world’s worst-performing currency this year, extended its selloff on Friday after the IMF said it wants to conclude talks on a credit line as soon as possible. Mauricio Macri’s administration is negotiating for as much as $30 billion in assistance after draining its foreign exchange reserves in a futile attempt to prop up the currency. The five-month rout in the peso has sparked a surge in interest rates and is threatening to derail the country’s recovery.

The lack of proper communication with market participants is undermining Macri’s government and its push to reform the Argentine economy, Marx, 65, said. It’s particularly worrisome as the central bank is facing a May 15 deadline to renew a record 673 billion of pesos ($29 billion) of short term notes.

“The communication of this attempt to get a credit line has been mismanaged from the very beginning and the destruction of value is already high,” he said.

Marx, who in the early 1990s helped convert Argentina’s bad debt into Brady bonds, also held the title of vice minister in 2001. He clashed with economy minister Domingo Cavallo over his plan to restrict access to bank deposits and prohibit most wire transfers abroad in 2001 before resigning a month prior to the country declaring default on $95 billion of debt, a then-record.

— With assistance by Ignacio Olivera Doll

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