Wednesday, June 12, 2024

ECONOMY | 10-03-2022 23:16

Argentina's lower house prepares to vote on IMF deal, approval likely

Argentina's lower house on track to approve government's deal to restructure its US$45-billion debt with the International Monetary Fund in a session just after midnight; Senate still to vote; Protesters clash with police during demonstrations against deal outside Congress.

The Chamber of Deputies is on track to approve the government's deal to restructure its US$45-billion debt with the International Monetary Fund in a session just after midnight Thursday that precedes the Senate's treatment of the draft agreement.

The programme will serve to refinance the stand-by agreement granted in 2018 to Argentina during the Mauricio Macri government in 2018, which planned for maturities of about US$19 billion this year and another US$20 billion in 2023, plus another US$4 billion in 2024.

President Alberto Fernández's government says matching those payments is impossible.

"This is the best refinancing agreement that could be achieved," argued ruling coalition lawmaker Carlos Heller (Frente de Todos) on Thursday. Rejecting the bill "would lead us to serious problems that we must avoid at all costs," he added.

The parliamentary session is expected to run into the early hours of the Friday morning, with the bill likely to pass.

The new Extended Fund Facility (EFF) programme lengthens payment deadlines, provides for 10 quarterly reviews and a four-year grace period. Payments will be due from 2026 to 2034.

To enter into force, the agreement reached between the government and IMF staff must be ratified by Congress and the multilateral lender's Executive Board.

Although the bill has been met by reticence from sectors in both the ruling Frente de Todos and opposition Juntos por el Cambio coalitions, it is expected that the majority of lawmakers will vote in favour of the new plan.

"This is no time for opportunism. The opposition should facilitate the possibility of restructuring the debt, but we cannot take responsibility for the programme that the government negotiated with the IMF," said opposition lawmaker Facundo Manes (Juntos por el Cambio).

The agreement will be opposed by the minority benches of the left and the libertarian right, according to their deputies.



A number of left-wing groups and social movements demonstrated outside Congress on Thursday, with the protest later turning violent. Some of the protesters set fire to rubbish bins and threw rocks at the Congress building. One police officer was hit by a Molotov cocktail bomb and some windows, including those of the office of the Senate president, Vice-President Cristina Fernández de Kirchner, were hit by stones.

The disturbances were condemned by several of the deputies in their speeches to the chamber.

Once the agreement is ratified, Argentina will receive a first disbursement of some US$9.8 billion (via IMF Special Drawing Rights), which will be used to pay a US$2.9-billion maturity due in late March, and also to strengthen the Central Bank's international reserves.

Argentina's reserves stand at US$37.3 billion, but liquid reserves are at a critical level.

Central Bank Vice-President Jorge Carrera said on Thursday that "if the agreement is not approved in Congress we are in trouble. Argentina cannot pay the March maturity" of the current programme with the financial institution, he explained.

The programme, described by the IMF as "pragmatic and realistic," commits Argentina to a reduction of its fiscal deficit from the current three percent of GDP to 0.9 per cent by 2024.




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