The Senate of Argentina holds this Thursday the last debate to approve a new agreement with the International Monetary Fund for 45,000 million dollars, with which he will conjure up the specter of default and try to curb runaway inflation of more than 50% per year.
This loan will serve to restructure the stand-by program received in 2018 during the Liberal government Mauricio Macriwhose maturities for some 19,000 million dollars this year, another 20,000 million in 2023 and 4,000 million more in 2024 Argentina cannot afford.
The Senate session began at 5 pm (GMT) and is expected to last more than 10 hours. The Plaza del Congreso was fenced off and under police surveillance, after a week ago, when the Chamber of Deputies voted in favor, protesters stoned the building and broke some windows, including those in Vice President Cristina Kirchner’s office.
With banners that say “No to the adjustment of the IMF“, the demonstrators were placed this Thursday in the streets surrounding the parliament.
“Hard decision”
To enter into force, the agreement must also be submitted for approval by the IMF board in Washington.
And time is short. Between March 20 and 22, Argentina must pay a capital maturity of 2,900 million dollars, an amount that it does not have, according to the central bank.
“We have to make a difficult decision: approve the arrival of the IMF when we had freed ourselves in 2006,” said senator Ricardo Guerra, alluding to when during the mandate of the then president Nestor Kirchner the country canceled some 9,500 million dollars of debt with the multilateral organization and ended its review visits.
Guerra stressed that the IMF “only left bad experiences” in Argentinabut maintained that it is necessary to approve the loan to “free the economy of such a burden, in order to return to growth, and recreate hope and credibility.”
The new credit agreement will be number 13 signed by Argentina with the IMF since the return of democracy in 1983.
This extended facility program provides for 10 quarterly reviews and a grace period of four years. Payments must be made from 2026 to 2034.
In exchange, Argentina commits to reduce the fiscal deficit from 3% of GDP in 2021 to 0.9% in 2024.
against inflation
center-left president Alberto Fernandez He thanked the parliamentarians who support the project. “We are going to have a clearer horizon. We will know that there is a problem that has not been resolved, but is beginning to be resolved, which is that cursed debt that we inherited,” he said, alluding again to the fact that the agreement was signed by Argentina under the government of its predecessor, in the middle of a currency run.
For Víctor Beker, director of the Center for Studies of the New Economy of the University of Belgrano, “if the program is approved, the degree of uncertainty decreases a little. The possibility of default and goals are set that the government will try to meet. Not all the unknowns are cleared up, but the economic agents know that there will be a supervisory body (the IMF).”
The goal, according to the IMF, is to “reduce persistently high inflation.” However, spokesman Gerry Rice said Thursday that “this will of course be a challenge in light of developments in the global economy, as rising commodity prices are affecting inflation around the world. “, in the midst of the war in Ukraine.
Argentina registered an increase in the consumer price index of 4.7% in the month of February over January, with a rise of 7.5% in the food category, with which inflation in 12 months was 52.3%, one of the highest in the world.
When the IMF board approves the deal, Argentina It will receive a first disbursement of some 9.8 billion dollars, which will make it possible to deal with the due date for next week and strengthen international reserves.
But there is mistrust in society about the measures that the government will adopt to meet the goals of the agreement.
“In relation to the economic situation, we are going to be worse off, that is the reality. We are paying for a scam,” Mónica Sulle, from the Socialist Workers Movementduring a protest against the IMF this week.
The initial agreement was signed for 57,000 million dollars, the highest amount that the IMF has granted so far. However, Argentina only received 44,000 million, as President Fernández renounced the pending tranches when he took office in December 2019.
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