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Guzmán and Pesce Joined the G20 Virtual Meeting

Today, the Minister of Economy, Martín Guzmán, and the BCRA’s Governor, Miguel Pesce, joined the third G20 Economy Ministers and Central Bank Governors Meeting to discuss the global economic outlook and to coordinate a joint action plan for economic recovery over the post pandemic. Guzmán stated that “post pandemic prospects will depend, to a large extent, on the way countries mitigate the COVID-19 impact”, and added that “public health is still the priority”.

Guzmán highlighted the importance of safeguarding “production capacity, workers’ and companies’ know-how, and households’ income”, and claimed that Argentina will continue moving in that direction “to restrain the increase of poverty and indigence”.

Also, Guzmán warned that “many countries would have to make room for fiscal space to introduce economic recovery policies” in the aftermath of the pandemic. In addition, he pointed out that the IMF is expected “to play a key role for assessing the payment capacity of countries with unsustainable debts” and warned that “if private creditors fail to acknowledge the IMF’s debt sustainability assessment, that will entail a denial of its preferential creditor status”.

In turn, Pesce asserted that “modern Collective Action Clauses (CACs) included in sovereign bonds prospectus have an essential role to achieve an orderly debt restructuring”.

In this sense, the BCRA’s Governor reminded that “the G20 stated, mainly in the 2014 and 2015 Leaders’ Statement, that modern CACs would contribute towards orderly and foreseeable sovereign debt restructuring processes”.

“Argentine debt includes agreements with different types of CACs, and we can assure that the use of new CACs represents a step forward in the right direction”, he added. All in all, Pesce emphasized “political actions aimed at regulating and monitoring non-bank financial institutions, in particular, their role in liquidity and effects over debt markets”.

“This is a good time to make progress on a macro prudential approach focused on monitoring and regulating the performance of investment funds, in particular, establishing a regulatory treatment similar to the one implemented for banks and insurance companies, thus avoiding excessive regulatory imbalances”, he underscored.

Last, Guzmán thanked G20 countries for their support in the debt restructuring process that Argentina is going through. A few weeks ago, the Government submitted to the U.S. Securities and Exchange Commission (SEC) an amendment to the offer made to bondholders, which acceptance falls due on August 4.

The third meeting (virtual this time) of Economy Ministers and Central Bank Governors of the G20, under the presidency of Saudi Arabia, was headed by the Ministry of Economy and the head of the monetary authority of that country, Mohammed al-Jadaan and Ahmed Alkholifey, respectively.

Most participants highlighted the importance of taking coordinated actions to leave the crisis behind and the priority to protect the most affected and vulnerable sectors.

The Ministers and Central Bank Governors also agreed that the countries are going through different stages of the crisis and are acting accordingly.

Furthermore, they discussed the G20 initiative to suspend debt services of low GDP countries. Moving in this direction, they released, by the end of the meeting, a statement highlighting the need to monitor growing debt vulnerabilities globally and to work towards a coordinated resolution, while they urged private creditors to participate in this initiative.

July 18, 2020.

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