New economy chief Martin Guzman says he is already in talks with the IMF and other creditors.

Argentina will conduct talks with its creditors to delay debt payments as it steers away from more public spending cuts, according to the country’s new economy chief Martin Guzman.

Latin America’s third-largest economy is “extremely fragile,” Guzman said in his first news conference since taking office on Tuesday.

Argentina will have to grow its way out of its “virtual default” situation with production-oriented policies, rather than lowering government spending, Guzman said, adding that Argentina’s current agreement with the International Monetary Fund (IMF) had failed and would have to be revamped, with negotiations already under way.

He promised to take a non-dogmatic approach to policymaking while maintaining a constructive relationship with the IMF and other nervous creditors.

Argentina has said it needs to renegotiate about $100bn in bonds and loans as the economy sputters.

“The year 2020 is not a year in which fiscal adjustment can be made. A larger fiscal contraction would deepen the recession and aggravate the problem,” Guzman told a nation anxious for change as poverty rates climb, investment flat-lines and inflation rages at an expected 55 percent this year.

Guzman, a 37-year-old academic with close ties to American economist Joseph Stiglitz, has to navigate restructuring talks with international bondholders and the IMF over its $57bn standby loan agreement.

“We need to solve the virtual default problem left by the previous administration,” said Guzman. He was named economy minister by Alberto Fernandez, a moderate Peronist inaugurated as Argentina’s president on Tuesday.

In the October presidential election, Fernandez defeated incumbent Mauricio Macri, a free-markets advocate whose popularity was crushed by tight fiscal policies sanctioned by the loan deal he struck with the IMF last year.

Macri was forced into the IMF deal to halt a run on the peso as markets worried about Argentina’s ability to pay its debts. The local currency lost more than 83 percent of its value against the US dollar during Macri’s four-year term.

But Guzman has said in academic presentations that he sees Argentina’s problem as one of liquidity rather than solvency. He has advocated for a debt revamp based on a suspension of payments that would preserve eventual repayment of principal.

“We want to have a constructive relationship with all creditors: with private bondholders and with the International Monetary Fund,” Guzman said at the news conference.

“Based on this constructive spirit, we will establish with our creditors a modification in our debt profile,” Guzman said.

“We have already had conversations with the IMF, there is already a recognition of the failure of the previous programme.”