Argentina-IMF: loan agreement finalized, parliament ballots on bill

After a deep, “in-principle agreement” in late January, Argentina and the IMF on Thursday finalized a detailed agreement on the refinancing of the country’s vast debt. given, aimed at stabilizing a notoriously weak economy.

And the gust of wind became an oxygen balloon. After two years of negotiations, a “pre-agreement”, then five weeks of final talks on the devil in details, Argentina and the International Monetary Fund were able to announce a “technical” agreement on an economic path for the country. Next year.

The agreement seals the modus operandi for the refinancing of Argentina’s debt, a legacy of a loan contracted in 2018 by Mauricio Macri’s previous government (center-right) of about $45 billion to the multilateral institution in Washington. Record debt to the IMF, and for which Mr Macri had welcomed the strong support of former US President Donald Trump.

The IMF stressed that the agreement is focused on “strengthening macroeconomic stability with a pragmatic and realistic programme, credible economic policies, and meeting Argentina’s challenges (…) in terms of sustainable development”, adding “a consistently high Inflation (50.9 per cent in 2021) and “credible improvements in public finance”.

– Budget: Balance Objective 2025 –

Received “after in-depth negotiations”, according to Argentina, the agreement solidifies the pre-agreement announced by the two sides in late January. According to Buenos Aires, this prevents Argentina from going absolutely “due” from 2022, then again in 2023, with a repayment deadline of about $19 billion.

It staggered, after a four-year “grace period” from 2026 to 2034, in return for macroeconomic objectives for Argentina, including a gradual reduction in the budget deficit to 0.9% of GDP in 2024 (against presently 3%). Provides repayment. ), explained to the government. “And zero in 2025,” the IMF said.

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The program welcomes Buenos Aires, allowing for “the essential conditions of sustainability” for “sustainable and inclusive growth”. Argentina returned to growth in 2021 (+10.3%) after a three-year recession, including a year linked to the Covid.

The agreement still has to be submitted to the IMF’s executive board and the Argentine parliament for approval. The Chamber of Deputies exam is expected to begin from Monday.

The test may not be easy for the government: the centre-left coalition in power under President Alberto Fernández does not have a majority in the Senate or lower house, even though it is most important in each instance.

Regularly, it has faced demonstrations from the Left and Union Territories, claiming that it has not paid anything because “the debt is with the people, not the IMF”, in a country where 40% are poor.

– Energy: earners more will pay more –

The “letra chica” (small print) of the agreement was not disclosed before it was presented to lawmakers. But in recent times, the government has taken care to reassure. Mr Fernandez promised parliament on Tuesday that “no pension reform”, “no labor law reform”, that “rising prices are over”, and that budgetary discipline “will not challenge our social justice policies”. “.

The rub will really hurt, but depends on the income. Government spokeswoman Gabriella Cerutti told the IMF that the reduction in public subsidies demanded by the IMF, particularly in energy, would be “fragmented”, with the increase in bills sparing the most vulnerable.

Why would a compromise, where the word “adjustment” has been carefully avoided, this time work for an economy that is still ill-equipped despite nearly twenty IMF recourses from the 1950s?

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“Because it is based on realistic objectives, on a pragmatic approach, and + ownership + program by the Argentine authorities”, Ilan Golfjan, IMF Director for the Western Hemisphere commented on Thursday, underscoring “a learning from past experiences”. . ,

The road’s response to the first bills remains unknown. “We know this agreement will cut into everything that is social,” AFP Karina Rios, 45, resigned on Thursday in an anti-IMF protest. “What we want is job creation going forward”.

Unknown, ultimately, the degree of cooperation of the opposition in Parliament with the presidential election of 2023. “We have full confidence in the Argentine authorities (…) to gain political support”, Mr. Golfjan estimated.

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