Argentina’s debt deal with IMF gets final legislative OK
Argentina’s senate has given final legislative approval for President Alberto Fernandez’s administration to refinance the government’s $45 billion debt with the International Monetary Fund and avoid a default.
The lawmakers voted 56 to 13, with three abstentions, to approve the deal signed with the IMF in early March. It was approved by the Chamber of Deputies last week, but it must still be approved by the IMF’s board.
While the approval helps the South American country avoid another default and economic turmoil, it may have created an insurmountable fracture between Fernandez and his powerful vice president, former President Cristina Fernandez, who has questioned the terms negotiated with the IMF.
In 2018, under the government of center-right Macri, the IMF approved its biggest-ever loan of $57 billion to Argentina. The country received $44 billion of that amount.
Macri’s successor, Alberto Fernandez, refused to accept the rest and sought to renegotiate repayment terms.
Payments of $19 billion and $20 billion were due this year - a timeline the government considered impossible.
Argentina is just emerging from three years of economic recession and battling rising inflation and a high poverty rate.
The country recorded a 4.7 percent jump in its consumer price index in February compared to January, with a 7.5 percent rise in the cost of food.
Under the new deal -- the 13th that Buenos Aires has signed with the IMF since the return of democracy in 1983 -- repayments will be made from 2026 to 2034 after a grace period.
Argentina has committed to reducing its fiscal deficit from 3.0 percent of GDP today to 0.9 percent by 2024.
The agreement provides for a series of macroeconomic measures to control the country’s chronic inflation (50.9 percent in 2021) and reduce its budget deficit of three percent of GDP last year until it is balanced in 2025.