The Minister of Economy, Martín Guzmán, and the President of the BCRA, Miguel Pesce, participated today in the third meeting of Finance Ministers and Central Bank Governors of the Group of 20 (G20) to discuss the global economic outlook and coordinate a collective action plan for economic recovery in the post-pandemic. During his speech, Guzmán stated that “the post-pandemic outlook will depend to a large extent on how countries deal with the impact of COVID-19,” adding that “public health remains the number one priority.”
Guzmán stressed the importance of the measures adopted to protect the “productive capacities, know-how of workers and companies and take care of the income of families,” and maintained that Argentina will continue on this path “to contain the increase in poverty and indigence.”
Guzmán also warned that, as a result of the COVID-19 crisis, “many countries will have to create the necessary fiscal space to implement economic recovery policies” in the exit from the pandemic.
The head of the Ministry of Finance also pointed out that the IMF is expected to “play a central role in evaluating the payment capacity of countries with unsustainable debts” and warned: “If private creditors do not recognize the IMF’s debt sustainability analyses, this will be equivalent to not respecting their status as a preferential creditor.”
For his part, Pesce said that the “modern Collective Action Clauses (CACs) included in sovereign bonds have a fundamental role in allowing an orderly outcome for debt restructurings.”
In this regard, the head of the BCRA recalled that “the G20 stated, especially in the Leaders’ Declarations of 2014 and 2015, that modern CACs will contribute to the order and predictability of sovereign debt restructuring processes.”
“Argentina’s debt includes contracts with Collective Action Clauses of different types, and we can assure you that the use of the new CACs represents a step in the right direction,” he said.
Pesce also urged to emphasize “policy actions aimed at regulating and supervising non-bank financial institutions, in particular their role in liquidity and the effects on debt markets.”
“This is the opportunity to advance in a macroprudential approach focused on monitoring and regulating the behavior of investment funds,” particularly, “to establish a regulatory treatment similar to the one we implement for banks and insurance companies, avoiding any excessive regulatory imbalance,” he added.
Finally, Guzmán thanked the support provided by the G20 countries to the debt restructuring process carried out by Argentina. The government filed weeks ago with the U.S. Securities and Exchange Commission (SEC) the amendment to the offer to bondholders, whose deadline for acceptance expires on August 4.
The virtual meeting, the third of G20 finance ministers and central bank governors under the Saudi Arabian presidency, was chaired by the Saudi Arabian finance minister and the head of the Saudi Monetary Authority, Mohammed al-Jadaan, and Ahmed Alkholifey, respectively.
During the meeting, most of the participants highlighted the importance of taking coordinated actions to get out of the crisis and the priority of protecting the most affected and vulnerable sectors.
The ministers and central bankers also stressed that countries are in different phases of the crisis and with responses according to the moment they are going through.
In addition, the importance of the G20 initiative to suspend debt services for low-income countries was discussed. In this regard, a statement issued at the end of the meeting highlighted the need to monitor the growing debt vulnerabilities globally and work on mechanisms for a coordinated resolution, while urging private creditors to participate in this initiative.
