Thursday, July 18, 2024

ECONOMY | 08-03-2022 21:17

Government asks Congress to speed through passage of IMF deal

President Alberto Fernández's government calls on Congress to "speed up" the treatment of its bill to refinance Argentina's US$45-billion debt with the International Monetary Fund.

President Alberto Fernández's government has called on Congress to "speed up" the treatment of its bill to refinance Argentina's US$45-billion debt with the International Monetary Fund as the parliamentary debate gets underway.

"I ask for speed and support to leave behind this burden that we have inherited and to be able to concentrate on deepening the economic recovery," said Cabinet Chief Juan Manzur at a joint meeting of the Budget and Finance Committees of the Chamber of Deputies.

After a year and a half of negotiations, the government announced last Thursday that it had sent to Congress the text of the agreement it has reached with IMF staff to refinance its debt with the organisation through a new financing programme.

"We are facing an objective circumstance: Argentina does not have the necessary funds to meet the maturities of 2022 and 2023. Our task is to avoid a scenario of generalised default," Manzur told lawmakers.

The credit, contracted by Argentina in 2018 during Mauricio Macri's term in office, provides for payments of about US$19 billion in 2022 and another US$20 billion in 2023 – demands that the government considers unsustainable.

The new programme provides for 10 quarterly reviews and a four-year grace period. Payments are to be made from 2026 to 2034. For the loan to enter into force, it must be endorsed by Argentina's Congress and the IMF's execurive board.

"The alternative to the IMF agreement is uncertainty," said Economy Minister Martín Guzmán on Monday, arguing that the proposal "is a programme for recovery and to reduce inflation."

"We want to fulfil it, our commitment is to effectively fulfil it," he declared.

Fernández does not have a majority in Congress and must also deal with reticence from the Kirchnerite sector of his ruling Frente de Todos coalition, who demanded "more toughness" in the negotiations with the IMF.

Among those who are reluctant to sign up is Máximo Kirchner – lawmaker and son of former president and current Vice-President Cristina Fernández de Kirchner – who resigned his post as lower house caucus leader in order to avoid backing the deal. He an his backers argue that the IMF should have considered the responsibilities of having granted such an "unpayable" loan.

Argentina's record US$57-billion loan, granted in 2018, was the largest in the history of the multilateral organisation. Argentina received US$44 billion.

In the opposition Juntos por el Cambio  there is no unanimous position either. The coalition is divided between those who want to reject the new agreement and those who are willing to vote in favour. Some want to approve the talks with the Fund, but not the government's economic programme for the coming years.


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