Argentina and the IMF said Thursday they had reached agreement on a "pragmatic and realistic" plan to repay the country's US$44.5-billion debt with the multilateral lender.
The deal "seeks to continue generating conditions of stability necessary to address the existing structural challenges and strengthen the foundations for sustainable and inclusive growth," a statement from the Economy Ministry said.
The agreement – the details of which were ironed out between Argentine officials and IMF staff after an in-principle agreement in January – reached is based on what is known as the Extended Fund Facility (EFF), which includes 10 reviews to be conducted quarterly over a two-and-a-half-year period. Any deal is still subject to approval by Argentina's Congress and the IMF's Executive Board.
A bill outlining the details of the agreement will be sent to Congress later today (Thursday, March 5), with debate in the lower house scheduled for next week.
"The National Government will this Thursday send to the National Congress the agreement reached with the International Monetary Fund staff to refinance the record debt of approximately USD45 billion taken by the Juntos por el Cambio administration," said the statement.
The bill "includes as annexes all the documents that make up the agreement, that is, the Memorandum of Economic and Financial Policies and the Technical Memorandum of Understanding," it added.
An IMF team, led by Deputy Director of the Western Hemisphere Department Julie Kozack and Luis Cubeddu, IMF mission chief for Argentina, also issued a statement confirming that an EFF deal for 30 months had been agreed. It spoke of a "pragmatic and realistic programme, with credible economic policies to strengthen macroeconomic stability and to address Argentina's deep-rooted challenges to sustainable growth."
“IMF staff and the Argentine authorities have reached a staff-level agreement on the economic and financial policies to be supported by a 30-month Extended Fund Facility (EFF) Arrangement," it continued.
"The EFF, with requested access of SDR 31.914 billion (equivalent to US$45 billion or 1000 percent of quota), aims to provide Argentina with balance of payments and budget support to address the country’s most pressing economic challenges and to enhance the prospects of all Argentines by implementing measures designed to promote growth and protect essential social programmes," it read.
It would also seek to "durably address persistently high inflation" while "credibly improving public finances."
The deal would "support reserve accumulation and net exports" to facilitate Argentina's re-entry into international capital markets, said the IMF.
President Alberto Fernández's government in late January announced it had reached an "understanding" with the International Monetary Fund on key policies needed for a deal with the crisis lender. Officials from both sides have since been hammering out the fine print.
Former president Mauricio Macri in 2018 originally agreed to a US$57-billion loan, the IMF's biggest-ever credit-line, but which the lender recently acknowledged had failed to achieve the objectives of restoring confidence in the country's fiscal viability and fostering economic growth.
President Fernández refused to accept the final disbursements of US$13 billion upon taking office in December 2019. Repayments of US$19 billion and US$20 billion were due this year and next.
Under its new deal, Argentina has committed to progressively reducing its fiscal deficit from three percent of GDP in 2021 to 0.9 percent in 2024. The gradual reduction – to 2.5 percent in 2022 and 1.9 percent in 2023 – would "not prevent the recovery" of the economy, according to Economy Minister Martín Guzmán.
Under the new deal, repayments will be made from 2026 to 2034 after a grace period.
In January, Guzmán said the lender risked losing credibility if it "pushes" the country "into a destabilising situation" with an "unsustainable" repayment calendar.
Argentina is just emerging from three years of economic recession and battling rising inflation and a high poverty rate.