Protesters opposed to the IMF agreement gather outside the Argentine Parliament in Buenos Aires
The Argentinian Senate on Thursday definitively approved the agreement between Buenos Aires and the IMF on the refinancing of the country’s debt, freeing up its short-term financial horizon, while leaving it with a serious inflationary challenge.
The Upper House, after the Chamber of Deputies, gave the green light to a resolution approving the refinancing program sealed on March 3 by the government and the International Monetary Fund (IMF) on the debt of nearly 45 billion dollars, the legacy of a record loan contracted in 2018 by the previous government of Liberal Mauricio Macri.
Argentinian President Alberto Fernandez thanked the parliamentarians, stressing that the agreement would allow the country to have a “very clear horizon”.
Argentine Economy Minister Martin Guzman hailed an agreement “radically different from all those previously concluded with the IMF”. “No rights are taken away from workers or retirees,” he said. This is the 13th agreement between the IMF and Argentina since the country’s return to democracy in 1983.
Outside the Senate, several hundred people demonstrated, at the call of trade union and left-wing sectors opposed to debt settlement.
A week ago, the debt agreement was approved by the Chamber of Deputies, subject to a broad cross-party consensus, rare in Argentina, between the center-left ruling coalition group and the center-right opposition.
Faced with the specter of default if the deal was not approved and therefore unenforceable, the same consensus prevailed in the Senate.
– “Context of uncertainties” –
“It is the responsibility of our government to build certainties in a context of uncertainty”, pleaded the Minister of the Economy Martin Guzman, a great craftsman of the agreement on the debt with the IMF, defending it before the senators.
The agreement between Argentina and the fund provides for a series of macro-economic measures to control the country’s chronic inflation (50.9% in 2021) and reduce its budget deficit (3% of GDP in 2021) up to balance in 2025. All under regular monitoring by the Fund.
Police guard the entrance to the Parliament in Buenos Aires, in front of which demonstrators opposed to the agreement with the IMF gathering.
In return, the repayment of the debt will not begin until 2026, after a grace period of four years, to be spread out until 2034. The time, according to Buenos Aires, to anchor sustained growth (after 10, 3% in 2021) revenue generator.
Without an agreement, Argentina would have been faced with unpayable installments for it more than 19 billion dollars in 2022, as much in 2023, and around 4 billion in 2024.
However, the shock wave of the conflict in Ukraine could already undermine the anti-inflationary objectives of Argentina, admitted Thursday the spokesman of the Fund Gerry Rice.
This “will, of course, be a difficult task given the evolution of the world situation, since the rise in commodity prices affects inflation all over the world”, and “Argentina, like other emerging economies, is already affected,” he said.
Argentina recorded cumulative inflation in January and February of 8.8%, or 52.3% over the last 12 months, which bodes ill for the objective of reducing inflation to a range of 38 to 48% in 2022. Compared to 50.9% in 2021.
The teams of the IMF, underlined Gerry Rice, “examine the potential impact (of the war) on the growth, the external accounts and the budgetary balance” of Argentina.
