Argentina finalizes loan agreement with IMF and sends it to parliament

The Argentine government announced on Thursday that it had finalized an agreement with the International Monetary Fund (IMF) to refinance its record $ 45 billion debt, which was sent to parliament for consideration the following day.

The IMF, in a simultaneous statement, underlined the agreement as “a practical and realistic plan, with credible economic policies, to strengthen macroeconomic stability and meet the challenges (…) in terms of Argentina’s sustainable development”. High inflation “(50.9% in 2021), and” credible improvement in public finances “.

According to Argentina, the agreement was reached “after intensive negotiations”, confirming the pre-agreement announced by both sides at the end of January and paving the way for several weeks of in-depth negotiations between the technical committees.

In return for Argentina’s large economic objectives, it means repaying its target of 0.9% by 2024, including a gradual reduction in its budget deficit (currently 3% of GDP) by 2024, after a “concession period” from 2026 to 2034. For its part the Argentine government in a press release.

The plan that emerges as a result of the agreement welcomes the government, contributes to the “stability conditions needed to meet existing structural challenges” and strengthens the foundations for sustainable and inclusive growth. After a three-year recession, Argentina returned to growth in 2021 (+ 10.3%).

The agreement must be submitted to the International Monetary Fund’s Executive Committee and the Argentine Parliament for approval. According to the chairman of the budget committee, the House of Representatives should begin examining the agreement next Monday.

The endorsement of macroeconomic policies that reflect the agreement cannot be a cogwheel for the Argentine government: the ruling (center-left) coalition does not have a majority in the Senate or the Chamber of Deputies, the most important parliamentary group in every power.

However, the conclusion of the agreement between the technical groups coincides with the lifeline provided by the pre-January agreement for Argentina, the third largest economy in South America, which has faced since 2022, and then again in 2023, with a repayment period of about $ 19 billion. , Completely “unpayable” according to the government.

This huge loan is the legacy of the loan obtained in 2018 by the previous center-right Argentine government of Mauricio Macri.