Top Fernandez Ally Says Argentina Needs Mature Rapport With IMF

(Bloomberg) -- With about a month to go before general elections in Argentina, one of the closest politicians to presidential candidate Alberto Fernandez says the country needs to maintain a positive working relationship with the International Monetary Fund.

Tucuman Governor Juan Luis Manzur said that Fernandez will honor Argentina’s debt obligations -- while seeking to normalize the economy -- by eventually rolling back capital controls imposed by President Mauricio Macri to stop the central bank’s bleeding of foreign reserves.

“We imagine a mature relationship, one that is strictly institutional and acknowledges the realities of what Argentina is going through,” Manzur said in an interview at Bloomberg’s headquarters in New York on Sept. 20. Fernandez is “fundamentally a man of dialogue and consensus,” and is working with provincial governors, union leaders and business representatives to build a broad coalition, Manzur added.

The IMF is unlikely to grant a $5.4 billion loan disbursement to Argentina until the policy objectives of the next government become clear, according to people familiar with the matter. Although Fernandez has not yet outlined his economic policies, Manzur said a Fernandez administration would seek “a new relationship” with the Fund.

Manzur, who won a second gubernatorial term on June 9, served as Health Minister under Cristina Fernandez de Kirchner and later became governor in October 2015. He hosted Fernandez in his home province on Sept. 11 while on the campaign trail, which included an event with union leaders and a brief TV appearance together following a Fernandez interview.

“The people of my province gave me a great responsibility, and I have to honor that responsibility,” Manzur said, referring to his governorship. But if asked to join a Fernandez presidency, Manzur said, “I will stand with him.”

Ongoing Recession

For the 50-year-old Peronist, building Argentina’s production sector will be key in Fernandez’s economic program if he takes office on Dec. 10. Manzur said that program should begin with a monetary policy decision: lower interest rates. Argentina has had the world’s highest interest rates for over a year as it battles runaway inflation amid a currency crisis. The current benchmark rate, set every day through short-term debt auctions, finished Friday above 82%.

Manzur acknowledged that Macri’s policies have been a boon to the airline industry and have grown exports. Tucuman Province, a major exporter of lemons and blueberries, benefitted in 2017 when Macri resumed lemon exports to the U.S. after a 16 year hiatus.

But Manzur cited Argentina’s ongoing recession and 10.6% unemployment in the second quarter as failures of Macri’s economic program.

In a Fernandez presidency, “the challenge we will have is to continue opening markets, continue adding value for producers, and in general improve infrastructure in order to be more competitive globally,” Manzur said.

--With assistance from Maria Jose Valero and Jose Enrique Arrioja.

To contact the reporters on this story: Scott Squires in Buenos Aires at ssquires4@bloomberg.net;Ignacio Olivera Doll in Buenos Aires at ioliveradoll@bloomberg.net;Jorgelina do Rosario in Buenos Aires at jdorosario@bloomberg.net

To contact the editors responsible for this story: Carolina Millan at cmillanronch@bloomberg.net, Carolina Wilson

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