By Philip Pullella
VATICAN CITY (Reuters) – The International Monetary Fund said on Wednesday that now was a “very important moment” for Argentina to enact policies for debt restructuring, while Pope Francis warned that insensitive solutions could damage societies.
Francis, himself an Argentine, made an unscheduled appearance at a conference in Vatican City where the two main participants were IMF Managing Director Kristalina Georgieva and Argentine Economy Minister Martin Guzman.
“It is very important moment for Argentina to put in place policies that are going to stabilize the economy, lead to successful debt restructuring and respond to the expectations of people that those who are the most vulnerable not be left out,” Georgieva told Reuters at the conference on economic solidarity.
She and Guzman held what both said were 2-1/2 hours of constructive talks on Argentina’s debt crisis on Tuesday night ahead of the conference.
Argentina needs to restructure $100 billion in sovereign debt with creditors, including the IMF, amid a steep recession with inflation above 50%.
The pope, who did not specifically mention the current Argentine crisis, called for “new forms of solidarity” to help indebted countries, saying “we are not doomed to universal inequality”.
“Poor people in heavily indebted countries bear overwhelming tax burdens and cuts in social services as their governments pay debts contracted insensitively and unsustainably,” Francis said, adding that a country’s debt policy “can become a factor that damages the social fabric”.
Last Friday, Argentine President Alberto Fernandez met the pope and the pontiff, who lived through a previous debt crisis when he was archbishop of Buenos Aires, had promised him to do everything he could to help with the current one.
Fernandez has promised to bridge social divisions and roll out a massive credit system with low rates to bolster domestic demand, and to boost spending to address hunger and poverty.
Guzman told the conference he has seen a “very constructive
approach from the IMF” and will need cooperation from bondholders to restructure sovereign obligations.
He stood by the government’s deadline of having a bond revamp deal done by the end of March. An IMF technical mission is expected in Buenos Aires next week to discuss obligations owed to the fund.
The Vatican conference at the Pontifical Academy of Social Sciences brought together more than 25 government officials, religious authorities, and economists, including Joseph Stiglitz, the 2001 Nobel economics laureate.
Stiglitz told the conference that the current Argentine debt crisis gave the world an opportunity “to show that there is an alternative approach to the one that has failed persistently in the past”.
Stiglitz called for “a framework that simultaneously should appeal to notions of economic rationality and to our sense of social solidarity, a common humanity, which at this point in history seems so under attack”.
(Additional reporting by Hugh Bronstein in Buenos Aires; Editing by Kevin Liffey and Giles Elgood)